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Economic Commentary

Economic Commentary: The Benefit of a Clear Mind and Strong Stomach

September 21, 2026 by Jeanette Garretty, Chief Economist

Worth Watching

  • Speeches by Federal Reserve Governors Goolsbee, Williams, Jefferson and Barkin
  • US 3-month and 6-month T-bill auctions, Monday, September 21
  • President Trump meeting with Chinese President Xi Jingping
  • University of Michigan Survey of Consumer Inflation Expectations in September, released Friday, September 25

The Benefit of a Clear Mind and Strong Stomach

Every home realtor knows that a 7% mortgage rate is the kiss of death.  Stock market savants know that a 5% 10-year Treasury yield is a tipping point. Lots of economists know that trade wars cause recessions. And now we are told, with a certain amount of qualified certitude, that AI could/will kill us. In all of this, it becomes extremely important to ask “Why?” or “How?”. The answer is frequently based on perceptions of historical reality, which should be tempered with the knowledge that history is a guide, not an oracle.

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A broad and measured (analytical) understanding of the global economy at this moment provides little support for any theories of imminent collapse due to ongoing inflationary pressures or threats to trade. On the cusp of the final quarter of 2026, consensus world economic growth is 2.5%, possibly higher if US third-quarter economic growth has strengthened as commonly estimated. Energy-importing countries are doing less well than countries with a certain amount of energy self sufficiency, yet most countries in the world have avoided recession and, as many have observed, current levels of interest rates and inflation are clearly tolerable.  Until, of course, they are not, in some unforeseen way. This is not intended to be an “on the other hand” kind of economic commentary, simply a recognition that higher prices (interest rates are a price of money), rising debt burdens, trade friction and rapidly changing technologies are all economic stressors which will continue to test the foundations of economic growth. A rational examination of economic resilience in the face of stress can provide productive insight into the very complicated nature of modern economies and how any one action or number is seldom the ”trigger,” as commonly thought. However, that same examination should also highlight much that is not known about how stresses can interact and play out over time. The global economy is currently doing relatively well; but it is not for the faint-of-heart.

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Disclosures

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