Danielle DiMartino Booth: The Fed's First Rate Hike in Three Years and Where the Economy is Breaking

— Federal Reserve ended its longest pause since 2008 with a rate hike; Kevin Warsh signaled possible follow-through hikes if energy prices drive broader inflation.

— Small business failures are accelerating, with 200+ companies closing monthly for five consecutive months and bankruptcies up 64% year-over-year.

— Homeowners are withdrawing equity at higher mortgage rates, and delinquencies are rising across multiple consumer segments including Uber drivers.

— Nearly 100% of recent GDP growth is attributable to the AI trade; peak AI could pose significant economic risk if the sector cools.

— U.S. national debt crossed $40 trillion with $250 billion added quarterly; government cannot meaningfully slow deficit spending or debt rollover.

— Political calendar (midterm elections in six days) makes October rate hikes politically unlikely, but December hikes are priced into markets.

— Monitor small business and delinquency data more closely than headline labor metrics; Fed characterization of labor market health is questionable given rising bankruptcies and layoffs.

— Consider concentration risk in AI-driven portfolios; if AI becomes efficient enough to eliminate jobs or training slows, earnings outside AI could disappoint significantly.

— Diversify into hard assets and learn independent financial analysis rather than relying on social media; policy uncertainty and potential universal basic income proposals pose inflation and devaluation risks.