Solid Q4 GDP caps a tumultuous 2022
- Q4 2022 GDP came in +2.9% and beat expectations of 2.6%
- Consumer spending was up 2.1% but down from 2.3% in Q3, which indicates a slowing economy
- The Federal Reserve has raised interest rates seven times for a total of 425 basis points
Turns out the U.S. economy had another excellent year in 2022, as measured by the Bureau of Economic Analysis (BEA). As the world’s largest, most diverse, resilient and productive economy, the fourth quarter of 2022 came in at an annualized rate of 2.9%, vs. Wall Street’s expectations of 2.6%. While this reflects a slowdown from the prior quarter’s pace of 3.2% growth, it is still a solid performance, especially considering that last year’s first and second quarters were both negative. READ MORE
2022 ends on an up note and the new year is looking even better
- The U.S. economy added 223,000 jobs in December, against expectations of 202,000
- The unemployment rate fell to 3.5% from a November high of 3.7%
- Wage growth came in at an inflationary 4.6%, pushing the Fed to continue rate hikes
At last March’s BrandSource Summit in Las Vegas, our dealers faced rising inflation, a war in Ukraine, the banking community solidly predicting a 2022 recession and the threat of a job market collapse. The Federal Reserve had already committed to extensive interest rate hikes during the year, which should have slowed regular economic activity even more than anticipated. READ MORE
November jobs numbers come in hot
Last week’s November jobs report from the Bureau of Labor Statistics came in much higher than expected, with an increase of 263,000 new hires versus expectations of 200,000.
The unemployment number stayed the same as October at an historically low 3.7%. Wages rose 0.6% last month and surprised economists because it was twice the forecasted increase. On annualized basis, wages were up 5.1%, which was terrible news for the Fed as this rate is inflationary. READ MORE
Down the Rabbit Hole: Why I’m eager to return to an economy that follows the rules
In baseball, the rules have not changed in over 100 years; if you hit a ball to center field, you run to first base, not third base.
Yet our economy no longer follows the rules of my old college textbooks, and the reactions to information on the macro or micro level are somehow different today than they were just three or four years ago.
When I watch Bloomberg business news, I get the feeling that we no longer follow the old, prescribed ways. For example, the strong jobs report in November did not send the Dow higher; instead, a good report takes the markets lower. Likewise, consumer confidence is falling rapidly, which usually implies less spending, although retail sales and consumer spending are up. READ MORE
Economic expert Joe Higgins answers his audiences’ most frequently asked questions
I often get questions about the U.S. economy at the end of my presentations, whether I am doing them live or on Zoom. I always enjoy these interactions with the audience.
Here are the three most frequently asked questions.
Question 1: How high will interest rates (Fed funds) go?
As you all know, the Federal Reserve has raised rates six times this year to slow the economy just enough, but not enough cause a recession. The Fed has named the actions of raising interest rates just enough, without dire consequences, a “soft landing.” Analysts see the Fed moving rates another 50 basis points in December with more increases into 2023. READ MORE