The federal reserve has shown that the annual rate for interest has risen at 5% since last month. PCE has fallen almost 6% since last recorded in November. With an improvement in inflation recently it has caused the stock market to go on an upward slope. Inflation rate is still about 2% above the average from the goal the FED has set. The economy has taken a turn regarding the prices for products and services as goods prices have increased 4.6% and services prices have increased 5.2%, this increase does not include the increase in the price of food which has risen nearly 12%. Many economists believe that the economy is headed for a crash especially with how weak the 4th quarter is.
While many people see inflation going down as a plus for how the economy is doing but the reality of it is the economy is slowly teetering from going into a recession. Prices continue to rise and employment is going down, this will result in consumer spending to drop.
https://www.usnews.com/news/economy/articles/2023-01-27/inflation-cools-further-in-december-ahead-of-key-fed-meeting
2 comments:
Inflation has cooled but, it still is very high which will cause the markets to lower again soon. I also saw that last month the government passed another $1.7 trillion spending bill which is money that they do not have. Given the bill, it would not be surprising to see that inflation will take another rise. The debt ceiling was also hit recently and I think that is very alarming too. When a nation's economy and government is broke, it should be expected that their markets should see a huge fall and maybe collapse.
What policies do you think the FED will enact to continue to try and ease inflation? I think it would be beneficial to continue their interest rate hikes as an effort to attempt to accomplish a smooth landing. I think we may be coming to a recession, but it will be interesting to see how the Fed responds in their up coming meetings.
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