GDP numbers came out for the first quarter, and people are not pleased with the 1.6% drop. This drop, in addition to a rise in inflation caused the Dow Jones Industrial Average to drop 400 points. These two drops could signal that we may have a recession coming soon. This is because we have been predicting a recession over the last year, and now the GDP is down more than we thought. and inflation is up more than we predicted. As regards to the inflation rates, Jeffery Roach says, “Savings rates are falling as sticky inflation puts greater pressure on the consumer. We should expect inflation will ease throughout this year as aggregate demand slows, although the path to the Fed’s 2% target still looks a long way off.” It looks as if we are heading towards a recession, and I predict GDP will drop another 1.5% next quarter, and inflation will rise another 0.5%.
Link for article: https://www.cnbc.com/2024/04/25/gdp-q1-2024-increased-at-a-1point6percent-rate.html
The recent GDP figures indeed paint a concerning picture, and your analysis underscores the growing apprehension among investors and economists alike. The combination of slowing GDP growth and rising inflation is a classic precursor to potential economic downturns. However, while the outlook appears bleak, it's also crucial to consider any potential policy responses that might mitigate these challenges. The Federal Reserve's next moves will be pivotal in shaping the economic trajectory. It will be interesting to see if their actions can steer us back towards stability or if we're indeed set for more turbulence. As always, a nuanced view is essential in these complex economic times.
ReplyDeleteHow might the economy be affected if GDP keeps dropping and prices keep going up?
ReplyDeleteSeeing these indicators start to forecast a recession is not good, especially the unexpected GDP drop. This is interesting because in our newsletter, we saw signs not pointing to a recession.
ReplyDeleteBased on employment growth and wage increases, many economists believe there is a low likelihood of a recession. However, different sectors may indicate different possibilities/outlooks for the economy. However, it could also be the consistent dynamic between economists where they tend to never agree, especially on topics of growth and recession.
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