Nancy Lazar, the chief global economist at Piper Sandler, has revealed that the US economy is currently facing a unique and challenging economic situation. This rare and complex situation is characterized by a “bifurcated” state that has only occurred twice before in history: during the energy crisis in 1978-79 and the Great Recession in 2008. While some companies have benefited from high interest rates and favorable financial conditions, others are struggling to cope with the price hikes and financial strain.
According to Lazar, large corporations are benefiting from several factors such as increased interest rates, positive stock market rallies, government support, and financial stability. However, consumers are facing significant financial difficulties due to rising debts, high interest rates, and inflation eroding their wage increases. Lazar believes that higher interest rates are necessary to address excesses and inflation eventually leading to a recession.
The economist emphasized that a recession is crucial in addressing ongoing inflation issues. Without it, there is a risk of continued excessive spending and rising prices. She expressed more concern about persistent inflation than about avoiding a recession. Lazar stressed the importance of finding a balance between controlling inflation and maintaining economic growth while ensuring that consumers can cope with price hikes without facing significant financial strain.
In conclusion, Piper Sandler’s head economist predicts that there is a 53% chance of a recession to address inflation issues in the US economy. While some companies may benefit from high interest rates, others may struggle with rising debts and price hikes. Nancy Lazar emphasizes that striking a balance between controlling inflation and avoiding a recession is essential for sustainable economic growth in the long term.
