Summary
Commerce Bank’s Scott Colbert Discusses Current Inflation and Interest Rates
Scott Colbert, Executive Vice President at Commerce Bank, recently discussed various economic factors impacting the country during a featured episode. Colbert also serves as the Chief Economist at Commerce Bank and shared insight on challenges in the commercial real estate industry, unemployment, personal credit card debt, and more.
Interest Rates and Inflation
According to Colbert, the Federal Reserve will likely raise rates only one more time before holding them steady to monitor the economy’s slowdown. The increase in interest rates coupled with a decline in occupancy rates will likely lead to a decrease in commercial real estate prices, making it difficult for properties to refinance mortgages and leading to a potential recession. Additionally, despite inflationary pressures caused by stimulus spending, the Fed is trying to combat inflation by raising interest rates while the government continues to deficit spend, presenting a significant challenge for the Fed.
Unemployment and Personal Credit Card Debt
Colbert pointed out that the unemployment rate is a significant driver of economic growth. As fewer people are employed, the amount of money moving through the economy decreases, potentially leading to a recession. Debt as a percentage of income also tends to increase during a downturn, and delinquency statistics worsen. Although many banks faced difficulty during the pandemic, those who were successful demonstrated growth, a non-sticky deposit base, an asset and liability mismatch, and buying a considerable number of bonds.
The Banking System and Yield Curve Inversions
Colbert further explained the changes in the banking system since the Fed started increasing interest rates. He also addressed the yield curve inversion, which occurred 18 months before the recession, indicating a possible recession. Finally, Colbert graded the Fed Chairman Powell’s performance, stating that although the Fed may have been slow to recognize inflation, they are willing to take the heat for creating a recession by raising interest rates to lower inflation in the long run.
Note: This is an AI generated transcript, not edited by a staff writer and is solely intended for educational purposes. If you have any questions/concerns, reach out to podcasts@beckershealthcare.com
This episode aired on 04/14/2023 and can be listened here.
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