The GDP increased at an annual rate of 1.1 for the 1st quarter of 2023. This comes off a 2.6% increase in the GDP in the 4th quarter. The FED and bank failures are starting to take effect on this economy. The brakes have been hit and the economy is starting to show the effects of the higher interest rates. Inflation is cooling but consumers are still spending. Interest rate hikes have a lagging effect and will take months for the consumer and business to pass the effects into the economy. However, we are starting to see it happen. You can see the release here at the BEA.gov (Bureau of Economic Analysis).
The jobless claims come in a bit lower than expected. The job market has been very resilient, but we would expect this to change over the next couple of quarters. The data is available at dol.gov. Everywhere, you are seeing layoffs in the economy. The jobs market is going to be a gradual decline until something changes like a slowness of interest rate hikes.
We would expect the FED to start to slow the rate hikes. We will more than likely get one more and that might be it. All eyes will be on the FED next week, the market is looking for a signal that interest rates may be near an end. By the 3rd quarter, we are more than likely going to be in a full fledge recession. Technically, we haven’t entered a recession, but this is also a lagging indicator. The economy will not be classified as being in a recession until after it is in one. All signs point to a recession, but it isn’t a guarantee. This is the time to get your financial health in order, be reluctant to switch jobs, and watch your debt. If you are investing, look to value and dividends. This is probably the best time to be in dividend stocks. Why you get a rate of return (dividend) to hold stocks that should have some upside in the future. Just do your homework, be patient and invest for the long term.
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