This episode features Scott Colbert, Executive Vice President at Commerce Bank. Here, he discusses current inflation & interest rates, challenges in the commercial real estate space, the deficit, unemployment, personal credit card debt in the country, and more.
Summary
Commerce Bank's Scott Colbert Discusses Current Economic Challenges
Introduction
In this episode, Scott Colbert, Executive Vice President at Commerce Bank, discusses various economic challenges faced by the country such as inflation & interest rates, unemployment, commercial real estate and personal credit card debt.
Challenges in Commercial Real Estate
Scott Culbert, the chief economist of Commerce Bank, believes that the commercial real estate market will face significant challenges due to higher interest rates, lower loan to value ratios, and lower debt serviceability. Lack of occupation in commercial properties has led to a situation similar to the subprime crisis.
The Impact of Federal Deficit Spending
Federal deficit spending has inflated the economy and delayed a recession, but it has made it more difficult for the Fed to control inflation without risking a recession. To understand the economy, it is essential to keep an eye on the cyclical parts of the economy such as building permits, new orders, profitability, and employment.
Unemployment as a Key Driver for Growth
Unemployment is a leading driver of economic growth, and as a precursor to that, increases in personal credit card debt are also observed. Despite delinquency statistics getting worse, the situation remains surprisingly robust.
The Role of Banks in the Current Economic Environment
Banks have become more cautious in lending due to increased borrowing costs. The lower yield of the two-year treasury as compared to cash could signify a coming recession. Fed Chairman Powell has been criticized for not taking action against inflation sooner, but he is willing to face the heat to create a lower inflation rate in the future.
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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