Is a Recession Really Off the Table? | Weekly Business Briefs w/ Martin Perdomo

Is the economy on a stable path, or should we brace for a downturn? This week on the Weekly Business Brief, we unpack Janet Yellen's optimistic economic forecast, where she argues that strong business performance, robust consumer spending, and substantial job creation signal a thriving economy with no recession in sight. We also tackle Yellen's take on inflation, discussing her belief in its impending stabilization and how this might relieve financial pressures. However, we critically examine the potential pitfalls of continued high interest rates, particularly their impact on the housing market and business cash flow.

In another segment, we scrutinize why major US banks are taking a conservative approach amid inflation concerns and post-COVID-19 uncertainties. How are these cautious financial strategies influencing lending practices and interest rates on savings accounts? We also revisit Donald Trump's promise to increase green cards for highly skilled immigrants, dissecting the policy's intentions versus its less-than-stellar implementation. Tune in for a balanced perspective on these pressing economic issues and share your thoughts on our analysis. This episode promises to equip you with a nuanced understanding of current economic dynamics and policy impacts.

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Transcript

Speaker 0: 0:29

Today is June 26, 2024, and here are the top three headlines in this week's Weekly Business Brief. Janet Yellen recently dropped the bombshell prediction about our economy. In a recent interview with Yahoo Finance, janet Yellen, a prominent figure in economics, expressed optimism about the future of the economy, suggesting that a recession is not on the horizon. Yellen highlighted several reasons for her positive outlook. She noted that businesses are performing strongly, consumer spending remains robust and there continues to be significant job creation across various sectors. The factors, according to Yellen, indicate that the economy is poised to continue its expansion in the coming months. Yellen also addressed concerns about inflation, which occurs when prices rise. She acknowledged that inflation has been a concern recently, but indicated confidence that it will gradually stabilize. This stabilization could alleviate some of the financial pressures felt by consumers and businesses alike. Overall, yellen's assessment provides reassurance amid economic uncertainties, suggesting that current conditions support continued growth and stability in the economy, offering a hopeful perspective for millennials and others concerned about the future economic outlook. What she fails to address, though, here is that if interest rates continue to stay this high, the housing market could potentially bust and businesses will struggle. Right, because our businesses need cash influx. Right, we need an influx of cash which we borrow to keep our businesses going.

Speaker 0: 2:16

Next up is your bank account safe. Why US banks are playing it safe now? Major US banks are approaching their financial strategies cautiously for the near future. They're expected to be conservative in their spending and risk-taking due to concerns about inflation and the overall economic outlet. Inflation, which refers to rising prices, poses a risk to banks as it can impact their earnings from loans and interest rates. High inflation could reduce the value of money over time and affect profitability by lowering interest income for loans. Additionally. Profitability by lowering interest income for loans. Additionally, banks remain cautious about economic post-COVID-19.

Speaker 0: 2:57

Despite improvements, there are lingering uncertainties about the strength and sustainability of the recovery. This uncertainty prompts banks to exercise prudence in their lending practice and hesitate in raising interest rates on savings accounts. Overall, banks are navigating potential economic challenges. They're carefully maintaining financial stability amid uncertain conditions. So for sure, banks are being overcautious. They are still tough to lend. I know I borrow all the time for real estate and for my business and it is tough to get money from the bank. They are really playing it safe. I wonder what is it that the bankers know that we don't know? Remember, bankers have all of the data from credit card uses, from savings accounts. What do they know? What are they seeing? What are they experiencing in the marketplace? That's continuing them to stay conservative in the marketplace as it pertains to lending. We don't know. And this week, on Trump Watch Trump's green card promise. This is what really happened.

Speaker 0: 4:10

During his presidency, donald Trump pledged to increase the availability of green cards for highly skilled immigrants in the US. However, the implementation fell short of expectations due to bureaucratic hurdles and policy shifts. Trump aimed to prioritize merit-based immigration, favoring individuals with specialized skills or job offers over family-based immigration categories. Despite these intentions, the actual number of green cards issued under Trump's administration did not significantly rise. Many immigrants who were hopeful for increased opportunities faced delays and uncertainty. This situation was exacerbated by changes in immigration policies and procedural slowdowns within the Department of Homeland Security. Ultimately, the discrepancy between Trump's promises and the reality on the ground left many immigrants frustrated and questioning their prospects of obtaining permanent residency in the US.

Speaker 0: 5:12

So Trump had some really good ideas for immigrants that came here legally and that would provide value to the marketplace. Not saying that illegal immigrants are not necessarily providing value to the marketplace. They just didn't come here legally. So this is actually a sound policy in my opinion. What do you think? Let me know in the comments, let me know in the chat. Let me know what your thoughts are on this particular policy. Forget about who the person is the actual policy. Forget about the president administration. Tell me what you think about the policy in and of itself. I'd love to hear your thoughts, and this has been your weekly business brief. I'll see you guys next week.