In their new quarterly outlook summary for Q4 our partners at Buckingham Strategic have declared that it is too early to declare victory against inflation.
Inflation has started to cool off, and real economic growth continues to be stronger than most forecasters were predicting to start the year. As economic growth has remained strong, those predicting a recession this year were likely incorrect. However, there are clouds on the horizon, and the biggest longer-term threat to economic growth is the U.S. government’s mounting debt relative to GDP.
Consumer spending could come under pressure as pandemic-level savings are depleted and student loan payments restart. Since the Federal Reserve started tightening, auto loan and credit card delinquencies have increased, suggesting that some consumers may be overextended. Global inflation remains elevated, and with a trend toward deglobalization, slowdowns internationally have been more pronounced, especially in China. Oil prices have increased sharply over the past three months as OPEC+ countries have cut production.
Sources of Stability
Core inflation is trending down, and although it remains above the Fed’s 2% target, the U.S. economy will likely avoid a recession in 2023. The labor market is still strong with historically low unemployment. The Fed is likely near the end of its tightening cycle, and although markets still see the possibility of one additional rate hike, the economy continues to deliver strong results. The services sector continues to be expansionary. Fiscal policy remains accommodative despite the strong economy and restrictive rates.
Click here to read the full reference sheet which combines economic perspectives and market commentary with digestible talking points and illustrative visuals.
With offices in Rutland and Williston, Vermont Copper Leaf Financial we know that portfolio strategies and investment decisions can have a significant impact on your long-term success. Using an *Evidence-Driven Investing™ approach can increase the probability of a successful journey. Call us today at 802-878-2731 to schedule a strategy session and begin building your road map to financial success.
Recipients should not act on the information presented without seeking prior professional advice. Check with your advisor about your specific situation.