The US economy is facing a rare and challenging situation, according to Nancy Lazar, Piper Sandler’s chief global economist. Large corporations are profiting from higher interest rates and favorable financial conditions, while consumers are struggling with mounting debts and high inflation that erodes wage increases.
Lazar explained that the current economic state is a “bifurcated” economy, something that has only occurred twice before and both times ended in a recession. She emphasized the need for higher interest rates to eventually lead to a recession, which would help address issues like excesses and inflation.
Despite the potential for a recession, Lazar stated that it could be necessary to address the inflation problem. She worries more about persistent inflation than a recession and highlights the fine line that the economy is currently walking. Without taking action, there is a risk that companies and individuals will continue to bid up prices, leading to further challenges in the economy.