On Thursday, the U.S. gross domestic product (GDP) rose by 2.6 percent indicating that the U.S. economy was growing. This increase should reassure investors that the economy has not plunged into a recession. An economic slowdown had been forecast after the Ukraine-Russia war continues as it slows the global economy, as well. The dollar has remained strong against all global currencies due to fiscal measures taken by the fed, during the Biden administration.
On Thursday morning, President Biden released a statement: “For months, doomsayers have been arguing that the U.S. economy is in a recession, and congressional Republicans have been rooting for a downturn. But today we got further evidence that our economic recovery is continuing to power forward.”
As the GDP rose, so did the hope that a recession could be avoided. On Thursday, the Bureau of Economic Analysis released data showing that the GDP returned to growth after adjustments for inflation were made. The growth was seen in the third quarter after there were contractions in the first two quarters of the year.
The Commerce Department noted that the GDP in the third quarter rose by 0.6 percent making it a 2.6 percent annual growth rate. This indicates that there could a “soft landing” although the path is narrow. However, consumer spending has slowed down as inflation affected households ability to buy non essentials.
Consumers are not buying some items such as homes, cars and appliances but are spending on domestic travel as well as dining out, after the long spell of staying indoors for months. This domestic spending is helping the economy to some extent. Unemployment rates are at 3.5 percent which is a historic low and companies are hiring or retaining employees despite expected lower sales in winter as they don’t want to begin a rehiring spell in summer.
The housing sector has contracted as there was a sharp rise in interest rates but this could also have a positive impact along the way as there could be course correction. Housing prices had soared during the pandemic as the demand was more and supply was less.
Financial markets threw mixed results after the report of rise in GDP was released. The Dow Jones industrial average rose but the Nasdaq fell.
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