The Real Economy

The Real Economy: November 2023

The great rate reset and the middle market

The days of easy money are over and the economy is entering a new era of higher rates. For middle market businesses accustomed to low-cost capital, this new era is posing a particular challenge, requiring new strategies to manage these higher loan costs.

In this month’s issue of The Real Economy, RSM’s chief economist Joseph Brusuelas analyzes what is driving the great rate reset. Businesses and investors will have to adjust to a time when term premiums placed on debt by investors are positive, reflecting higher long-term trend growth. It also means higher loan costs for middle market businesses, which will require a rethinking of finance and accounting functions.

A big reason for this rate reset has been the resilience of the American economy, which has been buoyed by elevated levels of excess savings. Brusuelas and RSM’s U.S. economist Tuan Nguyen make the case that excess savings are higher than previously estimated and suggest that the recovery may last longer than expected.  

A new era has arrived in the American economy. Gone are the past 15 years of easy money and secular stagnation, with near-zero interest rates and unorthodox polices to avoid a depression.
Joe Brusuelas, Chief Economist

Still, there are headwinds. The resumption of student loan repayments, many have contended, could pose a threat to the recovery. But Brusuelas and RSM’s Mike Graziano contend that the economic impact will be modest.

Finally, RSM’s Nelly Montoya and Crystal Sunbury discuss why championing Latinos is a must for middle market businesses.

We look at these issues and more in the November issue of The Real Economy.

Inside the November issue

RSM contributors

The Real Economy Livestream series

Middle market outlook: Gearing up for 2024

Join RSM US Chief Economist Joe Brusuelas and U.S. Chamber of Commerce Executive Vice President Neil Bradley as they discuss the economic outlook and what middle market companies should anticipate in the coming months.

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Wednesday, Dec. 20, 2023

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1:00 p.m. ET | Noon ET

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Livestream event

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Timely economic analysis and trends to help middle market businesses succeed

Special report

2023 RSM US Middle Market Business Index Special Report: Funding

Rising real interest rates are pushing up the cost of commercial and industrial loans, making it harder for
middle market firms to meet payroll and finance their expansion, according to findings in the third-quarter
RSM US Middle Market Business Index survey.

Find out how businesses are coping with the higher cost of capital in our special report.

Also from The Real Economy

Monthly economic analysis report for the US middle market

The Real Economy Blog

The Real Economy Blog was developed to provide timely economic insights about the middle market economy. It is offered as a complement to RSM’s macroeconomic thought leadership, including The Real Economy monthly publication and the proprietary RSM US Middle Market Business Index (MMBI).

The voice of the middle market

Middle market organizations, which make up the “real economy,” are too big to be small and too small to be big. They have distinct challenges and opportunities around resources, labor, technology, innovation, regulation and more.