Danielle DiMartino Booth of QI Research with David Lin — Bankruptcies Soar, The Fed Just Lit A Fuse

The U.S. economy currently sits at a fragile juncture, where recent Federal Reserve rate hikes constitute a significant policy error. Danielle DiMartino Booth, CEO of QI Research, argues that the Fed’s reliance on aggregate data obscures a K-shaped reality where the top 10% of earners sustain consumption while the broader population faces shrinking real wages and rising costs for essentials. Deteriorating credit conditions, highlighted by widening CCC bond spreads and a 64% year-over-year increase in small business bankruptcies, signal systemic distress. Furthermore, the anticipated productivity miracle of artificial intelligence is currently experiencing a contraction in capital expenditure, undermining the narrative of sustained growth. As households deplete savings and trade down to discount retailers, the Fed’s aggressive monetary tightening risks accelerating a downturn rather than curbing inflation, necessitating a potential pivot toward more aggressive easing to address the cooling labor market and weakening consumer demand.