In the short term, U.S. growth has been supported by a combination of the post-pandemic normalization of economic activity and expansive fiscal policy, including direct government spending, excess household savings, manufacturing investment subsidies, and more. However, a significantly higher federal funds rate and tight bank lending standards are causing a material slowdown in private credit growth, as the chart shows. Going forward, weak private sector credit growth is likely to become a more meaningful drag on nominal gross domestic product (GDP) growth.
Groupthink is bad, especially at investment management firms. Brandywine Global therefore takes special care to ensure our corporate culture and investment processes support the articulation of diverse viewpoints. This blog is no different. The opinions expressed by our bloggers may sometimes challenge active positioning within one or more of our strategies. Each blogger represents one market view amongst many expressed at Brandywine Global. Although individual opinions will differ, our investment process and macro outlook will remain driven by a team approach.