27 July 2023
If you are covering the news that US GDP beat expectations and grew by 2.4% in the second quarter, please find below a comment from David Henry, investment manager at Quilter Cheviot:
“Just as the Federal Reserve thought it could take an extended pause with its rate hikes, the latest US GDP figure for the second quarter comes along and muddies the waters. The US economy has been remarkably robust in the face of the highest interest rates for decades and it shows no sign of slowing down. The Federal Reserve has always been clear that if the economy can handle more rate rises then it will continue on that path. This latest data point may just suggest that one more rate rise is not off the cards.
“Thankfully, the inflation data released alongside the GDP figure shows price rises slowing more than expected, so this should give some comfort that a soft landing can still be achieved. Any sign of a recession appears to be a long way off, if it all after this figure, and given the pace of the interest rate rises, this would be a remarkable feat.
“For investors, the US remains the number one economy, with the greatest number of opportunities out there. With economic growth holding up, the consumer still spending and potential productivity gains from the introduction of the likes of AI, the opportunities in the region remain very present and attractive.”
