The Fed’s Chairman, Jerome Powell, might not be a fan favorite right now with inflation in the US hitting a three-decade high, but the wider US economy has been on a path towards recovery, as of late.
Growth estimates from the US Bureau of Economic Analysis came in two days ago, and real GDP grew by 2.1% during Q3 2021. It’s a slowdown compared to Q2, but still puts the economy on track to achieve its highest growth rate since 1984. Also, as recent suspensions of unemployment benefits have pushed more people to take up jobs, the unemployment rate fell by 20 basis points in October 2021 and last week jobless claims hit their lowest level since November 1969. While consumer confidence took a bit of a hit, household spending was reported to have risen by 1.3% in October, while sales of new residential properties rose by 0.4% last month, compared to September. Overall, the US economy looks to be on solid footing with dropping unemployment and rising spending.
Why it matters
10-year Treasury bonds saw their yields rise following the Bureau’s reports — a sign that despite slower growth, investors are moving over to higher-return investments elsewhere in the market. The key metric on everyone’s minds, though, over the next year will be inflation and with the Fed Chairman’s reelection, people are waiting to see how Powell deals with it.
