US recession potential: Mixed signals from Nasdaq and gold

THERE is a lot of interest – pun intended – in the question about whether the US economy is expanding or not. The Federal Reserve seems determined to bring the economy to heel by raising interest rates.

It’s a uniquely US problem and solution, because of the way interest rates are structured in the US. Most home mortgages have fixed 20-year and 30-year rates. Business loans have variable rates, so the impact of changes in interest rates falls most heavily on business investment and operations, rather than on consumers.

In many other countries, home mortgages have variable interest rates. When rates rise, households and consumers are hit hardest. It’s an important difference in the way interest rate rises impact different economies.