Summary : The stock market moved slightly higher on Thursday despite U.S. economic growth contracting for the second quarter in a row, a significant recession indicator which spooked markets—though most experts argue that the economy is yet to fall into a true recession thanks to solid job growth and consumer spending. While the latest data no doubt adds to ongoing fears of an economic downturn in markets—especially as the Federal Reserve continues to aggressively hike interest rates, many experts still argue that the economy is not yet in a full recession, citing the strong labor market and solid consumer spending. “With solid job growth in the first half of the year, the economy didn’t look like it was in a recession,” says Comerica Bank chief economist Bill Adams, though he warns that the outlook for the rest of the year and into 2023 is a lot “dicier.”
Though LPL Financial chief economist Jeffrey Roach agrees “we are not in recession” as consumer spending remains “strong,” the latest data does have implications for Federal Reserve policy going forward, he argues. “The Fed will likely interpret this decline in real growth as confirmation to slow down the pace of rate hikes at the upcoming meetings,” which could “eventually mean smaller hikes in the near future.”
GDP Flashes Recession Warning Sign: Economy Shrank 0.9% Last Quarter As Experts Warn ‘Worse To Come’
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