Published on Friday, June 24, 2022

Mexico | Will there be a recession in the United States?

Recessions occur because the Fed's short-term interest rates determine the level of all rates in the economy: the Fed's rate hike implies higher rates for credit to companies, for mortgage loans and for consumer loans, etc.

Key points

  • Key points:
  • At the end of last year, before the Fed began its cycle of increases, in the United States you could obtain a 30-year mortgage loan with an average fixed rate of 2.6%; today the equivalent rate is more than double (5.9%).
  • This of course will slow down the demand for new houses, which will reduce the pace of construction, reducing employment in that sector and consumption.
  • People will buy fewer durable goods as credit for their purchase has become more expensive, while companies will take on less debt and invest less.

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