I think that could be a trap. Low interest rates borrow more money, credit spreads widen then spending stops and recession begins. Low interest rates for to long can be a problem allthough its like sugar it tastes so good!!
One thing that often gets diminished is that we don't all work in unison. We think of economic factors and then act like everyone will move as one. Yet, there are so many different groups of people impacted.
Just look at individuals first. We talk about investments and them shifting their investment habits. Well, most people do not have investments and, of those who do, many don't make decisions based on the markets but do so based on their personal preferences. There are those who will never stop investing in CD's regardless of how little they pay. Others who have never bought a municipal bond.
Low interest rates are only relevant to those who borrow and then only those who have discretionary borrowing. The individual with no debt isn't impacted. But also the person who has a home mortgage and loans on cars often isn't impacted. They trade cars when they need to and keep their home.
Now to businesses. Business is even less rational. Many today are motivated by their own stock performance over everything else and the mood of the market seems to control them. Others fall in the "Frank Borman Syndrome" of must be the biggest regardless of profits or losses. There are even a minority of us business owners who base decisions simply on good business. We're not going to buy or open more based on interest rates. We will determine what path to follow based on the mood of the buying public.
I see major companies influenced by what they read or here more sometimes than what is actually going on. I look at our own businesses as we were just doing some preliminary forecasting for 2020. In retail, all our trends are up. Should we pay attention to them or should we react to what economists or wall street is saying. In wholesale, the same, trends very favorable. Now, do we react to the economists and market there or should we fear our customers might. We have the odd conundrum of customers who are fearful their businesses will experience trouble and the analysts have negative forecasts for them, but their orders from us continue to rise and their inventories of our products are not high, but where they should be.
I see so many major companies only interested in what the analysts say. I see so many carrying debt that I find ridiculous in good or bad times. As a businessman, I don't understand the companies and the metrics they use. I don't understand Uber or Lyft but then I could never fit in Amazon where they've built something incredible without profits and are now starting to realize profits but not from their traditional business. They don't make money on what they sell, which messes up the entire market. They make money on their computer services and they make money on what others now sell on their site. Problem is many of those others make no money but Amazon doesn't care. So, retail is now led by a loss leader philosophy.
A lot of our population doesn't even follow economists or market forecasts or pay attention to anything like inverted curves or prognostications. We measure our economy by the stock market and yet most people have no stocks. Their economy is more influenced by the price of food and clothing and by rental prices as many of them are not home owners. Are they impacted more by the stock market or by tariffs raising the price of their Christmas shopping in Walmart? Or by their employers pay philosophies. A simple example is when larger companies get tax breaks, the average worker only cares if some of it gets passed on to them. If I'm making minimum wage, then the only economic factor relevant to my income is whether minimum wage is changed.
Now, as FDR said, "The only thing we have to fear is fear itself" there is still so much truth to that. If the population as a whole gets fearful over the economy, whether justified or not, then we will see problems. Buying will slow down in every segment of the market. Economics won't matter, but emotions will rule. I think of a President a few decades ago whose economics were the worst thought out ever and the laughing stock of comedians everywhere, but he could make one speech, one televised chat, and everything improved, people felt better and responded positively.
I feel like a recession is coming and I am 100% right. One will come. Some day. The problem is none of us know when. What goes up must come down. Isaac Newton knew that, Blood Sweat and Tears knew it. If I toss a ball in the air, I even know when it will come down and could calculate if so motivated how fast. When it comes to the economy, I don't know. That's where I differ from experts as they think they do know. Some will actually be right. I can predict rain every day until it rains and then stand up and scream I was right while ignoring all the other days. Everything every one posting here says about what is going to happen will be right. Some day.