Economic Recoveries – GDP Rises in the Fourth Quarter
Amidst major corporations rolling out their earnings, new economic data has been released with the potential to change investors’ mind surrounding the chance of a recession. Last quarter, Gross Domestic Product grew at a 2.9% annual rate, combating against high inflation and interest rates. The main cause for the growth was attributed to consumer spending. This marks the second consecutive quarter of positive growth, although, last quarter was higher at 3.2%. Nevertheless, it is a yearly improvement, with the previous fourth quarter growing only 1%. The current number reflects some recovery in consumer sentiment over the months October to December, however, analysts still believe there is a general slowing of economic activity outside of the labor market.
The news did seem to please the markets, as all indices stayed in the green, continuing its month-long rally to start the new year. Coupled with cooled inflation numbers, investors and citizens across the country are beginning to believe that a recession may not come this year. The data is still quite unclear, as although jobless claims reached near historic lows last week, retail sales numbers for December fell at the sharpest pace of 2022. It’s evident that throughout this year, investors should continue to monitor economic data to best determine whether the Fed’s actions will create the long sought after “soft”, or the dreaded “hard”, landing.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.