Heading towards the cliff?

Boom in lending meets a collapse in U.S. consumer confidence

While we wait to see if President Trump throws the world economy alongside the Middle East under a bus by striking Iran, let’s continue to analyze what is happening in the U.S. economy. On Friday, I updated our medium-term (8-10 quarters ahead) forecasting model for the U.S. gross domestic product, which persistently continues to show A) a further acceleration of economic activity in this quarter and B) a collapse of the U.S. economy during the next two quarters.

Today, in reflection to this, I update two of my favorite metrics of economic activity: growth of bank lending and growth of business lending. The picture they paint is supportive for the acceleration of the U.S. economy, but not so much for the collapse. However, the deepening collapse of consumer confidence signals just that.