Stocks are continuing to drop through February as reports are showing that everything is continuing to climb more than expected like spending by households, and inflation to the job market. With rates climbing it can be helpful because it drives down inflation but at the same time it can run the risk of a recession because these factors slow the economy. Cost for food, and energy has been reported almost 5% higher since January and is predicted to continue to rise even more. Shoppers are buying less expensive items overall and reports are saying that every month prices will continue to rise with the possibility of a recession.
This is a shocking article to read because the general consensus is that the market is doing really well and we are finally getting back to prices before covid. In class on Friday we were just discussing how shipping container costs have finally gone down.
https://www.usnews.com/news/business/articles/2023-02-24/asia-stocks-mixed-after-wall-st-breaks-losing-streak
4 comments:
The stock market can always be looked at as to how well the American economy is doing and where the trajectory of the economy could be. I think that there has been more involvement in the market since COVID started because people had more time on their hands and people are starting to pull their funds out.
Hello Ethan,
Inflation has been a hot topic for the past two years now. Although interest rates are super high at the moment, there has been some cooling in recent months. We are finally seeing the effects of the raising of interest rates by the federal reserve. The federal reserve continuously raised IR .75 points each month in order to lower spending. This decrease in demand is said to cool prices. Remember our target goal of inflation is 2%, but given the current state of the economy, this is not something we will see until a few years down the road.
Overall, good post! Well done.
It seems that inflation is much more deeply rooted that we think it is. Therefore, it leaves the question whether or not the Fed can handle this well enough with its tools in hand. Unemployment still remains way too low for the economy to enter a recession. Interesting times right now. Will the government step in this time with fiscal policies?
I think we can expect inflation to play a big role in 2023. The Fed has made it their main goal to control inflation and has implemented several interest rate hikes over the past year. However, this has not had the affect that was expected as consumer spending is still high. It will be interesting to see how the market will respond moving forward.
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