27 April 2023
If you are covering the news that the latest US GDP figures show growth in the economy is slowing sharply, please a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“The US economy is showing signs of creaking as the toll of higher interest rates and elevated inflation finally start to take a toll. Consumers continue to hold up well in the face of a difficult backdrop, but business investment and spend has slowed considerably and as such is weighing on the overall economy. Markets have responded positively as we are once again in a perverse situation where bad news raises the possibility of rate cuts, and this excites investors.
“However, slowing growth is going to be the theme for the global economy this year and may cause central bankers a severe headache should inflation remain stubbornly above target. The last thing the Federal Reserve wants to be doing is raising rates as the economy begins to grind to a halt and potentially exacerbating the situation. The coveted soft landing is looking increasingly difficult to achieve and we are now getting towards a position where the market may become concerned that stagflation could be a likely possibility. The next set of inflation statistics are going to be crucial for the subsequent moves by the Fed.”
