I think the "next shoe to drop" will be interest rates rising because something has to give; either rates increase or prices fall and it sure doesn't look like that's happening anytime soon. In fact, prices are set to explode higher due to many factors not least of which are the scarcity of basic materials like fertilizer, engine oil and natural gas.
Rates can't stay this low while prices keep rising but the Fed cannot allow rates to rise to quickly either since that will knee-cap their faltering recovery. Many of the causes for our current difficulties are self-inflicted by state policies both at Federal and Local levels which, if reconsidered or reversed would solve all the issues quickly. Since politics never happens quickly business owners are left twisting in the wind until something changes for the better or breaks, whichever comes first.
"How can the U.S. Economy be “Recovered” as suggested by the headline GDP, and touted by the FOMC as it raises Interest Rates, with March 2022 Payroll Employment still 1.0% (-1.0%) shy of recovering its Pre-Recession/ Pre-Pandemic Peak activity?"
We're Already seeing the beginning of uneasiness in the financial capital markets party because of the recent tremors in Currency FX trades in the Dollar. The global political conflicts have spilled into the business world as the US-led Western government lob economic sanction bombs which cause collateral damage as all weapons of war do. The damage is absolute carnage to the business models of mostly small business owners who also happen to provide the largest number of jobs in America and make up the back bone of the shrinking American middle class.
The OIS or "Overnight Index Swaps" are the indicator(s) the Fed looks at the most to gauge the health of money markets:
"The current spread between the U.S. three-month Libor and the overnight index swap rate, a gauge of short-term funding stress, rose on Tuesday to its highest since April 2021 as the fallout of the Russia-Ukraine war filters to certain money markets." - Reuters
I'm lending money to business owners every day and it amazes me that we haven't seen a higher jump in rates yet. If I had to guess I'd say the Federal Reserve is stuck between a rock and a hard spot; they can't let interest rates rise quickly enough to solve inflation without trashing the recovery and the stock market too! I wouldn't want to be in their shoes but, we're all on the same bus and they're driving!
I know I probably sound like a broken record by now but...the window of opportunity where businesses can borrow at low, fixed rates and use the proceeds to by goods and materials whose price is exploding higher will eventually close. Just saying.