Skip to main content

US economy progress.

 The US eco­nomy pos­ted bet­ter than expec­ted growth in the final quarter of 2022, even as the Fed's

US dollars

rate rises star­ted to weigh heav­ily on busi­ness activ­ity. That marked a slow­down from 3.2 per cent growth in the third quarter, reflect­ing the steps the US cent­ral bank has taken to damp demand. The Fed is now pre­par­ing to deliver a quarter-point rate rise, from the cur­rent range of 4.25 per cent to 4.5 per cent, next week as it weighs how much higher to go now that infla­tion appears to have peaked. Offi­cials broadly back the fed­eral funds' rate hit­ting 5 per cent, and for that level to be main­tained at least to the end of the year, sug­gest­ing fur­ther rises to come bey­ond the Feb­ru­ary decision.

The gross domestic product data are the latest sign the eco­nomy has proved more resi­li­ent than expec­ted in the face of sub­stan­tially higher bor­row­ing costs while also show­ing the Fed's actions are begin­ning to have a more not­able effect. «Look­ing at the head­line, it's all look­ing good. But, look­ing under the hood, it's just those troub­ling signs and a loss of momentum that we've been see­ing really in broad swaths of the data,» said James Knight­ley, chief inter­na­tional eco­nom­ist at ING. The fourth-quarter increase was fuelled in part by busi­nesses amass­ing invent­or­ies, espe­cially across the man­u­fac­tur­ing and util­it­ies sec­tors.

Con­sumer spend­ing, one of the main drivers of the US eco­nomy, was also steady, increas­ing 2.1 per cent. In a fur­ther sign of weak­ness, fixed invest­ment sank 6.7 per cent, with hous­ing-related invest­ment con­tract­ing 26.7 per cent on an annu­al­ised basis. Busi­ness invest­ment rose just 0.7 per cent. From the fourth quarter of 2021 to the fourth quarter of 2022, real GDP increased by 1 per cent, com­pared with 5.7 per cent in the same period a year earlier.

While the over­all labour mar­ket remains robust, with the unem­ploy­ment rate hov­er­ing at a multi-dec­ade low of 3.5 per cent, there are con­cerns about the out­look for the eco­nomy. «We could see a third con­sec­ut­ive of neg­at­ive growth».

www.sba.tax

Comments

  1. The US economy is strong but businesses do need more help to be able to ride out this year. Many have had or will have to lay off employees just to survive. Any help from the government would mean more people keep their jobs.

    ReplyDelete
    Replies
    1. We've already seen big companies like Microsoft or Amazon lay off a good number of people which isn't good. If such strong companies have to lay off so many people then what happens to little businesses?

      Delete
  2. That increase is mostly because of businesses amassing inventories so it shouldn't fool us into thinking everything is going well. It isn't. Many businesses are suffering and might have to close their doors in the next few months.

    ReplyDelete

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

India- UK trade deal.

  According to India's top trade official, talks with the UK regarding a trade agreement are progressing well, despite obstacles related to temporary work visas and the opening up industries like automotive and spirits. The Commerce and Industry Minister, Piyush Goyal, explained that India is seeking transition periods or greater market access in specific sectors due to its economy, which is slightly larger than the UK's and expected to outgrow it in the coming decades. If a trade deal is reached, it would be one of the most significant agreements for Britain since leaving the EU, and it would also be necessary for India, which surpassed the UK as the fifth-largest economy last year. Goyal stated that India aims to increase its economy from $3.5tn to $35tn by 2047, the country's centenary of independence. According to officials and diplomats in India, talks about a proposed trade deal may be finished by early September, just in time for the G20 summit in New Delhi. Nigel Hu...

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...