UNITED STATES—On October 27, the Bureau of Economic Analysis (BEA) reported an increase in the annual rate of the Gross Domestic Product of 2.6 in the 3rd quarter of the year, a sharp contrast from the -0.6 decrease at the end of the 2nd quarter. Economists expect a downward trend in the final quarter of 2022.
According to the BEA, the third quarter primarily reflected an increase in exports in addition to consumer spending minus the decrease in housing investments.
BMO Director and Senior Economist, Sal Guatieri shared his thoughts in a BMO publication on October 28. In his publication, Guattari explains that the U.S. is not in a recession.
“By expanding 2.6% annualized, real GDP (barely) retraced the decline of the prior two quarters, meaning the economy still has its head above water,” Guatieri stated.
“The rebound in growth was largely driven by forces that are unlikely to last, “ Guatieri added.”
The Economist indicated that while residential construction may not contract another 26 percent, the forces weighing down on the GDP in the third quarter are, “likely to persist.”
Guatieri explained the impact the high mortgage rates will have on the state of the economy.
“The housing market correction is expected to extend into next year, especially with 30-year mortgage rates punching through 7%, the highest in 21 years.”
According to Guatieri, Consumer spending slowed to a rate of 1.4 percent in the third quarter. Final sales to private domestic purchasers stalled in the third quarter.
“That means the US economy beneath the surface is losing steam.”
In an October 4 issue, The Economist reported that since the Federal Reserve raised their rates again on September 22, “global markets have been in turmoil.”
“As the Federal Reserve has tightened policy, asset prices have plunged. Stocks, as measured by the Wilshire 5000 all-cap index, have shed $12trn of market capitalization since January. Another $7trn has been wiped off bonds, which have lost 14% of their value. Some $2trn of crypto market-cap has vanished over the past year. House prices adjust more slowly but are falling. Mortgage rates have hit 7%, up from 3% last year.”- The Economist
FactsFirst.com reports a cumulative and annualized performance between Biden and Trump in the stock market. Cumulatively across the S&P 500, Biden is at 2.69% compared to Trump at 17.45% a difference of -14.76%. On the NASDAQ, Biden is at -15.87% compared to Trump at 29.37% a difference of -45.24%. Finally, on the DOW Jones, Biden is at 6.24% compared to Trump at 25.12% a difference of -18.87%.
On May 10, Biden made the following remarks on the White House webpage:
“I’ve built a strong ec- — we’ve built a strong economy with a strong job market. And I agree with what Chairman Powell said last week that the number-one threat is the strength — and that strength that we built is inflation.”
In a push to activate voters in the swing state of Pennsylvania, President Joe Biden and Vice President Kamala Harris took the stage in Pennsylvania. Biden was quoted in saying, “I’ve been to 54 states.” Harris helped Biden avoid a fall off the stage.
