1. American households are less sensitive to higher rates.
Americans hold less variable-rate debt and many locked-in rates when they were low. Consequently, a significant proportion are little affected by higher rates.
2. American businesses are also largely unaffected by higher rates.
3. The recession is postponed?
Corporate recession chatter has declined significantly. Pay attention to business spending to see if it follows. Improved sentiment has the potential to become a self-fulfilling prophesy.
4. Still, higher rates are affecting housing affordability and weakening demand.
New economic activity spurred by new home purchases is likely to remain subdued for the foreseeable future. Affordability is driving down housing sentiment, which in turn is suppressing sales activity.