- Please make your own contribution in the discussion below with a value added comments

A. Article Title: U.S. economy stumbles into final stretch of 2022 facing new pressures

Siegel and Lerman (2022) write an article highlighting recent signals from the U.S. economy that could predict where it is heading. The article claims that while some markets are not heavily impacted yet, the economy is showing signs of slowing and a recession in the U.S could be just over the horizon. One piece of evidence they use to support this comes from the three major U.S. stock indexes. They note that the Dow Jones, S&P, and Nasdaq have all recently closed out on bleak notes, and all are down at least 21% on the year (Siegel & Lerman, 2022, para. 8). They also point to the housing market as another indicator, which has considerably cooled off. For example, one of the most popular home loan products is only at 6.7% - the lowest level in over 15 years. However, Siegel and Lerman (2022) do conclude by stating that the labor market is still going strong as over 300,000 jobs were added in August and consumer spending and income have risen.

Before taking this class, I probably would have interpreted the last part about the strong labor market as being a positive sign thus making the article seem a little contradictory (recession looming but then comment on jobs being added). I now know though that jobs are a lagging indicator of business activity and therefore may not be felt in the labor market until a few months after the onset of a recession ("Chapter 8: Unemployment, n.d., para 23). This assignment has enabled me to better understand the connections between the economy and markets, so now I can speak more intelligently on the subject. For example, just because jobs are up does not mean the economy is all sunshine and rainbows.

References

Chapter 8: Unemployment. (n.d.). Principles of Macroeconomics. Retrieved from https://learn.umgc.edu/d2l/le/content/712838/viewContent/29136297/View

Siegel, R. & Lerman, R. (2022, October 1). U.S. economy stumbles into final stretch of 2022 facing new pressures. The Washington Post. https://www.washingtonpost.com/business/2022/10/01/economy-stock-markets-recession/

B. Article: Inflation Leave Consumers Growing More Gloomy in October

Author: Tim Smart

U.S. New & World Report usnews.com

With mid-term election approaching, Americans are concerned with the economy and inflation. The Consumer Confidence Index decreased in October after back-to-back monthly gains. The index currently stands at 102.8 down from 107.8 in September. The Present Situation Index that is based on consumers' assessment of current business and labor market conditions experienced a decline from 150.2 to 139.9 last month. Additionally, the Expectations Index, that is based on consumers' short-term outlook for income, business, and labor market conditions, slightly declined to 78.1 from 79.5. Although this is a slight decline it lingers in the level associated with recession.

The government will report on its first estimate of gross domestic product for the third quarter and analyst expect positive number to be around 3%. This follows two quarterly contractions in the first has, commonly a measure of a recession.

With the control of Congress hanging in the balance, most surveys predict a tight race as voters top concerns are abortion and the future of democracy followed by inflation and the economy.

Mortgage rates and Gasoline prices are two areas of the economy that are proven to be very sensitive to inflation and higher interest rates that the Federal Reserve has used as a mechanism to narrow the demand and inflation.

Economists anticipate a recession is near, probably in 2023 because of the Fed's actions. It is unclear if it will long-lasting or moderate.

Reflection

This article is very informative regarding consumers and how they measure the economy's current and future state. With the breakdown of Americans confidence, it is imperative the best candidates are elected for office. I was able to attend early voting today to cast my vote on these mid-term elections.

References

Inflation leaves consumers growing more gloomy in October. (n.d.). Retrieved October 28, 2022, from https://www.usnews.com/news/economy/articles/2022-10-25/inflation-leaves-consumers-growing-more-gloomy-in-october