US media: The US economy has entered a "default cycle", and consumers and businesses are feeling the pain of aggressive interest rate hikes | US | Enterprises
A large number of consumer defaults have occurred in the United States
On July 14th, according to Bloomberg, Slock, Chief Economist of Apollo Global Management, a US investment management company, said that although the Federal Reserve's rate hike cycle may be nearing its end, consumers and businesses are feeling the pain of ultra aggressive rate hikes, and the US economy has entered a "default cycle".
Slock told Bloomberg TV on the same day that the default cycle in the United States has begun, with increasing default rates on car loans and credit cards, as well as rising default rates in high-yield bonds and loan markets. Slock stated that the current market situation does not indicate that the Federal Reserve's aggressive monetary tightening policy has not yet had a negative impact on the economy. On the contrary, the impact appears in less prominent areas, ultimately leading to a slowdown in economic development. Slock expects the Federal Reserve to continue raising interest rates, stating that the US inflation rate is still far from the annual target of 2%, making rate hikes inevitable in this situation.
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Since the spring of 2022, the Federal Reserve has raised interest rates from near zero to over 5%. The Chairman of the Federal Reserve has stated that interest rates may be raised twice in the second half of this year to achieve the annual target of reducing inflation to 2%. However, as borrowing costs rise and household and business spending levels in the United States decrease, the US economy is being dragged down, with GDP growth rate dropping to only 1.1% in the first quarter of this year. Investors are also concerned that the Federal Reserve may go too far and quickly plunge the US economy into recession.
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