If there is one thing that is bothering the political set up, people and the investor community, it is the state of economy. However, numbers released in late October seem to provide some cheer.The third quarter (July-September 2022) GDP numbers point to the US economy recovery and dispels a fear of recession in the backdrop of high inflation and interest rates ruling high.
The recent GDP report that shows a growth of 2.6 per cent presents a positive outlook. In the first half of two consecutive quarters, we were witness to a general economic slowdown. For investors, the concerns over likely recession as predicted by some economists seem to have been quelled to some extent. The numbers released recently by the US Commerce Department also indicates that in general the economy is not as bad as some of the Republicans are making it out to be ie that the country is heading for a recession.
While the unemployment rate is pegged at 3.5 per cent, the recent announcement of job cuts by some of the tech bellwethers seems to have triggered a fresh discussion on the US economy and its impact on not just the domestic market but across the globe.
To address the high inflationary trend, the Federal Reserve has increased the interest rates again, which has impacted the domestic market and possibly generates a cascading impact on other economies.
While President Joe Biden’s team believes that the US is witness to an economic upturn, with lowest unemployment rate in over 50 years, and exports looking up, the Republicans have been pitching for a downturn and believe that we are already in recession.
In order to address the global fuel supplies issues due to the ongoing Russian invasion of Ukraine, the Biden administration has sought to release some strategic reserves aimed at addressing the fuel supply imbalance and ensure that the fuel prices do not spiral up.
Given this backdrop of some positive news comes the concern of potential job cuts by some major companies. Amid tightening of monetary policy and growing fears of a recession, Meta Platforms, Citigroup, Morgan Stanley, Intel, Microsoft, Twitter after Elon Musk takeover, Johnson&Johnson among others have all announced job cuts, leading to fresh concerns on the state of economy.Investors are treading cautiously and keeping a close eye on the quarterly numbers.