KBRA releases a report that examines the U.S. economy’s transition to “normalization” following extraordinary fiscal and monetary accommodation and the risks that transition poses to credit markets.

We are reminded that much of the current environment is not normal: economic growth and corporate earnings growth is running at twice longer-term averages, consumer and commercial default rates that are at structural lows, and household net worth has soared over the past two years. The cost underpinning all of that stimulus-fueled growth, including the worst inflation in 40 years, now threatens a soft landing. While we find that most U.S. consumers and businesses are well positioned to endure the “Great Deceleration,” we are keenly aware that slowing growth into a Fed tightening cycle, a still disruptive pandemic, and an increasingly risky geopolitical world will test asset valuations and will drive near- to medium-term recession risks up from very low levels.

Click here to view the report.

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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