The question of whether the US will go into a recession or not has been floating around the past year or two. There is not a definite answer but there has been better news as of recent. With recent inflation as well as the fed continuing to hike interest rates, the economy has been still steadily growing. This is heavily driven by consumer spending maintaining its power. Unemployment rates have been low and there has been a growth in wages which has helped to stabilize these numbers.
The fed has been raising interest rates as they prioritize the fighting of inflation. This has impacted the increase of yields on fixed income assets, rates of mortgages, and other finances. This may lead to a small recession where the economic growth will slow down, but the employment will not take as much of a hit.
A large factor in this topic is the state of corporate earnings. Even though the earnings growth decreased in the first two quarters of 2023, they are still beating forecasts. This impacts many other factors of employment and wages which ultimately leads to whether those will cause consumers to not spend as much.
Source: https://www.usbank.com/investing/financial-perspectives/market-news/economic-recovery-status.html
A look at the economy's performance after the Federal Reserve hiked interest rates is interesting. In these times, maintaining stability requires consumer spending and wage growth to keep resilient.
ReplyDeleteThis is a interesting outlook on what is currently happening. This is the question everyone is wanting to know and if the economy goes into a recession how will it turn out for the country. I am very shocked that consumer spending is still at great amounts considering the higher prices and interest rates.
ReplyDeleteWith the Fed crutching on consumer spending to not tip the economy into a recession, it is reaffirming to see a increase in wages and low rates of unemployment.
ReplyDeleteYour emphasis on the Federal Reserve's prioritization of fighting inflation through interest rate hikes is a great observation, it highlights the balance between growth and stability in the economy. I also thought your insight into the resilience of corporate earnings, despite a temporary dip, highlights the underlying strength of the business sector, which plays a crucial role in creating broader economic trends.
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ReplyDeleteThis is very interesting with the high interest rates the fed has been raising impacting our mortgage rates, and investment. Will our economy fall into a recession? with consumer spending slowing down because of the interest rates hiking up, unemployment will retain low because of the high corporate wages.
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