Eight Measures That Reflect a Slowing U.S. Economy

The American economy is showing clear signs of slowing down, fueling concerns about a potential recession.

The Federal Reserve is raising interest rates in an effort to slow growth as it seeks to curb persistently high inflation as well as consumer prices that are rising at their fastest pace in more than 40 years.

The job market remains healthy, but consumer spending, which drives the bulk of economic activity in the United States, is losing steam.

Here are eight other indicators signaling trouble ahead:

1. Retail sales: The latest report from the Commerce Department showed that retail sales fell 0.3 percent in May, and rose less in April than initially believed.

2. Consumer confidence: In June, the University of Michigan’s survey of consumer sentiment hit its lowest level in its 70-year history, with nearly half of respondents saying inflation is eroding their standard of living.

3. The housing market: Demand for real estate has decreased, and construction of new homes is slowing. These trends could continue as interest rates rise, and real estate companies, including Compass and Redfin, have laid off employees in anticipation of a downturn in the housing market.

4. Start-up funding: Investments in start-ups have declined to their lowest level since 2019, dropping 23 percent over the last three months, to $62.3 billion.

5. The stock market: The S&P 500 had its worst first half of a year since 1970, and it is down nearly 19 percent since January. Every sector of the index beyond energy is down from the beginning of the year.

6. Copper: Seen by analysts as a measure of sentiment about the global economy — because of its widespread use in buildings, cars and other products — copper is down over 20 percent since January, hitting a 17-month low on July 1.

7. Oil: Crude prices are up this year, in part because of supply constraints resulting from Russia’s invasion of Ukraine, but they have recently started to waver as investors worry about growth. The price of Brent crude, the global oil benchmark, dipped below $100 a barrel Wednesday for the first time since late April.

8. The bond market: Long-term interest rates in government bonds have fallen below short-term rates, an unusual occurrence that traders call a yield-curve inversion. It suggests that bond investors are expecting an economic slowdown.

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

Shopping Cart