Connect with us

Economy

US Economy Shows Worst Is Yet to Come, With Cooling Just Starting

Published

 on

(Bloomberg) — The US economy’s recent rebound is looking like a high-water mark for the expansion.

While government data on Thursday revealed US gross domestic product rose 2.6% at an annualized rate in the third quarter, that gain merely made up for the economy’s contraction during the first half of the year.

Total inflation-adjusted GDP in the third quarter was roughly the same as where it was at the end of 2021, and it may soon start deteriorating anew, with the Commerce Department report containing foreboding signs for the economy:

  • Investment in residential housing plunged at an annual rate of about 26% — a “monster” decline in the words of Citigroup Inc. economist Nathan Sheets and likely a response to the highest mortgage rates in two decades.
  • Consumer spending, the engine of the economy, rose 1.4% from the previous three months, capping the weakest three quarters since the demand destruction of early 2020.
  • Stripping trade and inventories out, final sales to domestic buyers showed an annualized growth rate of just 0.5%. That compares with an average of almost 2.6% over the five years before the pandemic.

“It’s very unusual to see that indicator basically stall outside of a recession period — that’s telling,” said Sal Guatieri, a senior economist at BMO Capital Markets, referring to the final-demand indicator. “That means the US economy beneath the surface is losing steam.”

Genius Dog 336 x 280 - Animated

The underlying signs of weakness highlight the difficulty President Joe Biden and Democratic lawmakers have had in crafting a narrative that resonates with voters in the run-up to Nov. 8 congressional elections. While the job market continues to expand, inflation and surging interest rates are taking a toll, as evidenced in Thursday’s report.

Biden himself hailed the release as showing that the economy “is continuing to power forward” and not in recession.

That’s not dissuading many from predicting one. McDonald’s Corp. Chief Executive Officer Chris Kempczinksi said Thursday he expects a mild-to-moderate recession in the US — even though the company itself is doing fine and saw a pick-up in a key metric for sales in the country this month.

What Bloomberg Economics Says…

“A return to economic growth in the third quarter obscures continued signs of a slowdown in components that provide a cleaner signal of momentum… The Fed is likely to view the weaker components as intended consequences of its tighter monetary policy, and not as reasons to back off the tightening cycle just yet.”

— Andrew Husby and Eliza Winger, economists

To read the full note, click here

Inflation-adjusted business investment advanced 3.7%, reflecting a robust increase in outlays for equipment and intellectual property products. At the same time, a separate report Thursday showed orders for non-defense capital goods, excluding aircraft — a proxy for business investment — dropped 0.7% in September, the most in more than a year.

“We expect third-quarter 2022 to mark the peak in quarterly growth, as the cumulative effect of tighter monetary policy begins to push growth below potential,” Morgan Stanley US economists led by Ellen Zentner wrote in a note. They expect fourth-quarter GDP will grow 0.8%.

Thursday’s data did nothing to dissuade traders from expecting Federal Reserve Chair Jerome Powell and his colleagues from boosting interest rates by 75 basis points next week. Futures trading reflects expectations for a half-point increase at the following meeting, in December.

One measure of inflation included in the GDP data, the personal consumption expenditures price index, rose an annualized 4.2% in the third quarter, the slowest pace since the end of 2020. But it likely reflects a decline in trade prices and residential investment, Morgan Stanley’s team of economists said — limiting its implications for the Fed.

Stripping out food and energy, the price index rose 4.5%. Monthly data for September will be released Friday.

How Executives See It

  • “The macro-environment indications of a recession are certainly increasing.” — John Greene, chief financial officer of Discover Financial Services, Oct. 25 earnings call
  • “Short-term consumer sentiment and consumer demand are clearly reflective of a recessionary environment. While at the same time, input costs, which you would expect to come down in a recessionary environment, are still elevated.” — Marc Bitzer, chief executive officer of Whirlpool Corp., Oct. 21 earnings call
  • “We continue to believe that 2023 demand for air travel will be robust. We currently see no signs of demand slowing as we move into the new year.” — Derek Kerr, CFO of American Airlines Group Inc., Oct. 20 earnings call

Source link

Continue Reading

Economy

UK's Economy To Dip Into Recession This Winter – OilPrice.com

Published

 on



UK’s Economy To Dip Into Recession This Winter | OilPrice.com

Genius Dog 336 x 280 - Animated


City A.M

City A.M

CityAM.com is the online presence of City A.M., London’s first free daily business newspaper. Both platforms cover financial and business news as well as sport and…

More Info

Related News

Recession

The UK’s recession will officially begin this winter and is likely to last for most of next year, a closely watched survey out today suggests.

S&P Global and the Chartered Institute of Procurement and Supply’s (CIPS) final purchasing managers’ index (PMI) measuring private sector activity in November was unchanged at 48.2, the lowest number since January 2021 when the UK was in the constrained by tough pandemic lockdowns.

The reading was below analysts’ expectations but held steady from an earlier estimate. The services PMI was unchanged at 48.8. Services firms generate about two thirds of UK GDP.

The figure prompted experts to predict the forewarned recession will start during the final weeks of this year. 

A recession is typically defined as two consecutive quarters of contraction. The UK economy shrank 0.2 percent over the summer.

PMI has slid this year

Source: S&P Global

Britain’s PMI has now been below the 50 point threshold that separates growth and contraction for four months now, indicating consumers and businesses started cutting spending during the summer when the cost of living crisis gathered pace.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said Britain is now in the teeth of the worst economic slowdown outside the Covid-19 pandemic since the financial crisis in 2008.

The economy is being spiked by the worst inflation crunch in 41 years, with prices rising 11.1 percent over the year to October.

Pay is failing to keep pace with inflation, putting households on track for the biggest living standards shock on record. The Office for Budget Responsibility reckons real incomes will fall 7.1 percent over the next two years.

That living standards squeeze is expected to drive a spending slowdown, keeping the UK in recession for at least a year. However, experts think the amount of GDP lost during the slump will be small compared to past recessions.

Businesses are being squeezed by soaring energy costs, forcing them to scale back unprofitable activity.

Gabriella Dickens, senior UK economist at consultancy Pantheon Macroeconomics, thinks businesses will have to shed workers to offset weaker spending.

“Firms will move decisively to reduce employment next year, as they are forced to consolidate costs in the face of higher financing costs and weaker demand,” she said.

The pound slumped 0.34 percent against the US dollar on the news. The FTSE 100 climbed 0.24 percent.

By CityAM

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage



Related posts

Adblock test (Why?)



Source link

Continue Reading

Economy

B.C.’s economy forecast to remain steady, despite slower near-term economic growth | BC Gov News – BC Gov News

Published

 on

Like other jurisdictions, B.C. is expected to see slower economic growth through 2023 because of global inflation and higher interest rates, before steady growth resumes in the medium term, according to projections from private-sector forecasters.

Each year, B.C.’s finance minister meets with the Economic Forecast Council (EFC), a 13-member council of private-sector forecasters from throughout Canada, in preparation for the next year’s budget. This is the second year that an additional set of discussions was added, providing an opportunity to consult with an Environmental, Social and Governance (ESG) Advisory Council to explore how the provincial government can continue to build a more inclusive, sustainable economy and support well-being in British Columbia.

The EFC anticipates the province’s economy will grow by 2.9% in 2022 and 0.4% in 2023; slower than their January 2022 forecasts of 4.2% and 2.7%, respectively. The updated figures are similar to what was presented in the Province’s Second Quarterly Report. Real gross domestic product (GDP) growth is then expected to pick up, with an increase of 1.6% in 2024, followed by gains of 2.3%, 2.3% and 2.1% in 2025, 2026 and 2027, respectively. The reduction in the near-term outlook is consistent with other jurisdictions and reflects persistent global inflation and interest rates rising higher and more rapidly than expected throughout Canada.

Genius Dog 336 x 280 - Animated

“We’re entering this period of slower growth and challenging global economic times in a strong position to continue supporting people, because B.C.’s economy grew more than most last year,” said Selina Robinson, Minister of Finance. “We’ll use the resources we have to address the issues that matter most to people, including housing, health care and building a sustainable economy that works for everyone – but no matter what is on the horizon and no matter what the numbers show, this government will continue to be here to support people.”

Discussions with the EFC and the ESG Advisory Council focused on current events, issues affecting B.C.’s economy and the environmental, social and governance opportunities and challenges facing the province. Topics at the meetings included:

  • global inflation and monetary policy impacts;
  • government policies to stimulate investment and ensure shared prosperity;
  • socioeconomic factors in B.C., such as inequality, Indigenous partnerships, and well-being;
  • environment, climate change and the transition to a lower carbon economy;
  • housing affordability and supply;
  • labour market dynamics and immigration; and
  • opportunities for businesses to build on B.C.’s strong ESG profile.

“We are committed to building an inclusive economy, where environmental and social sustainability is the basis for future growth,” said Robinson. “A strong social, cultural and economic foundation is key to successful and resilient communities. We know this, and we know generations will benefit from the decisions we make right now.”

Forecasts and feedback from the two councils will be used to inform the next provincial budget, which will be released on Feb. 28, 2023. EFC members will also have an opportunity to submit revised forecasts in early January.

Quick Facts:

  • In the Province’s Second Quarterly Report, B.C. projected a revised operating surplus of $5.7 billion in the 2022-23 fiscal year.
  • Since the summer, B.C. has rolled out approximately $2 billion in affordability measures.
  • Environmental, Social and Governance are three main categories often discussed when evaluating sustainability performance, risk-mitigation planning and societal well-being.

Learn More:

To read B.C.’s Second Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports

For information about new and existing support measures for B.C. residents, visit: https://strongerbc.gov.bc.ca/cost-of-living/

For more about the StrongerBC Economic Plan, visit: https://strongerbc.gov.bc.ca/plan/

To learn about the ways B.C. is committed to environmental, social and governance principles, read the ESG summary report here: https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/government-finances/debt-management/bc-esg-report.pdf

Source link

Continue Reading

Economy

A Look At Canada’s Growing Economy

Published

 on

Canada has one of the largest economies in the world, and the country’s largest industries include real estate, oil, and gas extraction, manufacturing, and mining. By GDP, Canada has the ninth-largest economy in the world. In 2020, Canada’s annual GDP was $1.64 trillion, and roughly one-third of GDP comes from Canada’s import and export of goods and services.

The Canada Special

Canada is home to many big-name brands. E-commerce giant Shopify is headquartered in the country, and central banks like the Royal Bank of Canada (RBC) operate within the country’s financial sector. RBC is regarded as one of the largest banks in Canada and the world. We recently saw HSBC Group agree to sell HSBC Canada to RBC. According to the CEO of HSBC Group, the company considered HSBC Canada’s strategic fit and ultimately found an upside in selling the business. RBC is reportedly buying HSBC Canada for $13.5 billion, which is expected to close in late 2023.

 

Genius Dog 336 x 280 - Animated

Growing Canadian Markets

Canada’s economy is constantly growing, too. RBC’s acquisition of HSBC Canada demonstrates this, but many other industries have taken off in the country over the years. One of the fastest-growing industries in 2022 is iGaming. iGaming refers to any online betting, such as online casino games and sports betting. This growth reflects a worldwide trend, where the global iGaming market is projected to grow to $114 billion by 2028.

In particular, Ontario’s iGaming market is leading the way in Canada. Total iGaming revenue in the second quarter of 2022 in Ontario’s iGaming market reached $267 million, up from the $162 million recorded in the first quarter of 2022. Likewise, total wagers, active player accounts, and average monthly spend per active player account increased in Q2 2022 in Ontario. Total bets entered the billions, jumping from $4,076 million to $6.04 billion in the second quarter.

Several operators and websites specializing in different areas of iGaming are live in Canada, helping the Canadian market reach a broader target audience. According to this review site, some of Canada’s most popular online casinos include LeoVegas, which specializes in mobile gaming, and Wildz. Wildz is an online casino known for offering lucrative casino bonuses. Canada’s iGaming market also offers French-speaking online casinos for Canadian players who want to speak French. This is particularly relevant in Quebec, a French-speaking province.

Interestingly, Canada’s iGaming market is rising simultaneously with the country’s eSports industry. In 2022, revenue in Canada’s eSports market is expected to reach nearly $25 million. This growth is attractive because eSports is a sector that the iGaming market is looking more into incorporating. People have shown that they enjoy placing wagers on eSports tournaments as they do with regular sports tournaments like the World Cup.

Canada has one of the largest economies in the world, so it’s no surprise to see the country continuing to push boundaries and grow its success in budding new industries like iGaming and eSports. Even though these are two competitive markets, Canada appears to have gotten its foot in the door already.

Continue Reading

Trending