The Bond Market Is Sounding This Alarm for the First Time in Decades: Here's What It Could Mean for the Stock Market.

The U.S. economy expanded at an annualized 4.9% rate in the third quarter, growing more than twice as fast as the long-term average. That reading is somewhat surprising in context. Many economists had warned of a recession this year, citing the nearly unprecedented pace at which the Federal Reserve has raised interest rates to curb inflation.

Those warnings seem almost laughable in light of the latest data, but that data may have captured the calm before the storm. Robust economic growth in the third quarter was a product of resilient consumer spending, but JPMorgan Chase says consumers are depleting savings and taking on debt to fund purchases. That is not sustainable, especially since student loan payments have restarted.

Meanwhile, business spending actually stalled during Q3, presumably because high interest rates have made financing options much less attractive. Some experts expect that trend to intensify in the coming quarters, and that might be the first domino to fall, setting in motion a series of events that ultimately leads to an economic downturn.

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Source Fool.com