2022 has been a year of transition away from unprecedented quantitative easing where central bankers flooded markets and government coffers with money, to the start of the tightening of the monetary policy belt.
The two dominant themes running through the U.S. economy in 2022 have been sluggish GDP growth and elevated inflation. From the growth perspective, this year has been the tale of two halves with the first two quarters seeing negative results for GDP followed by a positive third quarter and what is anticipated to be a continuation of upside growth in the fourth quarter.
Inflation Drops – And Sets a Trap for the Bulls
Equities rallied on the week in anticipation of a better-than-expected Consumer Price Index (CPI) report and a dovish pivot from the Federal Reserve.
Employment
Employment data was at the forefront of this week’s economic calendar. Despite concerns regarding an impending recession the employment picture continues to be resilient as the unemployment rate remained unchanged at 3.7%.
Stocks Rally as Powell Guides to 50 in December
Fed Chair Jerome Powell signaled the pace of rate hikes would slow and could come as soon as the next meeting in December.
We issue this week’s Insight somewhat early, given the Thanksgiving holiday, allowing all to hopefully relax and recall those things for which we’re thankful.
U.S. equities were basically flat since our last Insight.
Stocks Surge on Lower Inflation
Equities surged last Thursday when the Consumer Price Index (CPI) came in lower than expected. The S&P 500 jumped 5.55% on the day, the largest single-day gain since March 2020.
Consumer Focused Data Week
With consumers representing almost 70% of the gross domestic product (GDP) in the U.S., this week’s economic news gave us a picture of how they are doing.