The leading economic index in the United States declined by 0.8% in October, marking its 19th month of consecutive decline. Despite this, economists polled by the Wall Street Journal had predicted a drop of only 0.7%, indicating that the U.S. economy may not be on the brink of a recession as some had feared. This is because consumer spending has continued to rise steadily, offsetting the negative effects of high inflation and rising interest rates.
In fact, the U.S. economy grew at an impressive 4.9% annual pace in the third quarter, which suggests that it is far from collapsing. However, maintaining this momentum will be challenging due to interest rates that are currently at their highest levels in years. The Federal Reserve has raised a key short-term interest rate in an effort to control inflation, but this move is likely to slow down economic growth and could even lead to a recession if borrowing costs continue to rise rapidly.
Looking ahead, economists expect elevated inflation, high interest rates, and declining consumer spending due to depleted pandemic savings and mandatory student loan repayments to cause a very short recession in the near future. Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board, explained that “these factors are likely to create headwinds for the U.S. economy.”
Despite these challenges, however, stock markets were upbeat on Monday as both the Dow Jones Industrial Average DJIA and S&P 500 SPX rose during trading sessions.
Overall, while there are certainly risks facing the U.S. economy in the coming months and years, it’s important for policymakers and businesses to remain vigilant and adaptable as they navigate these challenges together.
The American economy appears resilient despite falling economic indicators.
The leading economic index fell by 0.8% in October marking its 19th month of consecutive decline according to data from