The U.S GDP growth rate declined by 1.4% in the first quarter, amid fears of the consequences of the Russian terms
The U.S. economy made an abrupt rebound, raising investors’ hopes of preventing a recession. The U.S. gross domestic product fell by 1.0%, which made investors thrilled about the GDP rate in the first quarter.
This was the fastest rebound in the GDP rate since 1984. Yet, other results were a bit of a disappointment to investors. Some of the results include Wall Street indexes falling during the past month of April.
The S&P 500 lost nearly 5.8% in April, putting it on track for one of its worst months since March 2020. The Nasdaq index fell by 10%, the worst monthly fall in the giant tech index since 2010.
The Dow Jones average industry gained 500 pints in April because of a strong labor force that the U.S. labor department focused on improving. The 1.4% decline in the gross domestic product rate brought some positive news for traders and investors, especially as we head into the next interest hike by the FED.
The report was released by the e-commerce Department. The report added that prices increased sharply in the first quarter. In the fourth quarter of 2012, prices rose by 7.1% year over year. Now by April, the rate is estimated at 8%.
Inflationary pressure remains a concern to Federal Reserve officials, and it has been confirmed that the next interest hike will be 50 basis points.
Over the next 8 months, the Federal Reserve will increase its rates 5–6 times, making it a total of 7 hikes by December 2022.
Some analysis says that the declines in the GDP rate will likely reverse by the end of the year due to external factors. Including the effects of the West European war.
Undoubtedly, stock and bond yields rose sharply this month due to rising concerns about multiple variants. The U.S. GDP growth is forecasted to increase by 4.4% by 2024, yet it is still too early to give an accurate prediction.
It’s a battle from all directions for the IU.S, and despite its great growth, the market’s vulnerability remains a concern.
Yesterday, Wednesday, Putin used its energy weapon against two countries, Poland and Bulgaria. As a direct declaration that all countries must comply with Russia’s terms, they will be cut off from gas supplies.
Consumer spending has risen 2.7% as inflation pressure keeps pressing on the wound. Consumer spending accounts for two-thirds of the economy. The increase in their rates goes back to a string of labor force recoveries and an increase in private payrolls and income.
Yet, the threat is far more dangerous. The U.S. faces the worst-case inflation scenario since 1980. On the other hand, interest rate hikes will certainly affect small businesses and the housing market to some extent.
Overseas, the military operation in Ukraine has caused mixed performances in international stocks. Oil prices are at their highest level, and a gas crisis will occur any time soon. On top of that, the global supply chain systems are under the gun, and there are talks of a global recession by the start of 2024 or 2025.
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