The Federal Reserve is hunting for a unicorn by holding U.S. interest rates steady and hoping that’s enough to bring inflation down to 2% without a recession.
Despite rising oil prices and mortgage and credit card rates, preliminary data indicates GDP grew strongly in the third quarter thanks to robust consumer spending and President Joe Biden’s investments in infrastructure, green energy and the semiconductor supply chain.
Consumers still have excess savings accumulated during the pandemic shutdown. But the bulk of what is left is likely concentrated among higher-income households; for many below the 50th percentile of wealth, most of those savings are long gone. headtopics.com
Also, the U.S. restarting student loan payments will subtract $100 billion annually from household budgets. Oil prices have risen owing to the Saudi-Russian pact to work with OPEC to curb production. That both brakes the U.S. economy by eroding purchasing power and pushes up prices for gasoline and heating oil and costs in transportation, construction, household products and the like.
The first half of this year, for many businesses that produce everyday items like laundry detergent, bottles and other plastic packaging, fresh produce, meat and other groceries, costs were kept down and profits margins and stock prices elevated by tamer material prices and the post-COVID healing of supply chains. headtopics.com
Economist have dialed back their forecasts about a U.S. recession and if there is one, it should be mild. Surveys of forecasters indicate GDP growth will slip to less than 1% in the fourth quarter of this year and first half of 2024, but shouldn’t go negative.