It’s time for some good news.
According to a recent Deutsche Bank report, the outlook for Main Street and Wall Street looks good.
It said the following:
- “We expect this week’s economic data to paint a picture of a very strong labor market as well as slow but still solid growth prospects. With inflation tame job number one for monetary policymakers We don’t expect this week’s FedSpeak to prompt a backlash from the task at hand.
Or put another way, jobs will remain in abundance while the economy will grow rather than contract.
The mention of “FedSpeak” refers to how the Federal Reserve, the US central bank, will talk to investors about its current war on inflation. This, the DB report indicates, will continue to top the to-do list for Jerome Powell and the Fed gang.
On the development side, let’s hope the DB is correct. Economy shrank 1.5% in first quarter, If it does so in the second quarter, the economy will be in recession according to the metric used by most economists. Typically, there is a recession in the two previous quarters of negative growth, although the ‘recession’ in 2000 didn’t really account for any quarter of negative growth.
The good news is that second quarter growth looks to be strong. Trading economics sees marginal growth for three months through JuneAnd then for the rest of the year.
On the inflation side, things are hard to parse. Yet when you look in detail things seem to be getting better.
The annual rate of inflation was recorded at 8.3% in April, up from 5% in May last year. It is heavy by recent standards and is definitely cutting into the household budget. That in itself sounds bad.
However, if you look at the month-on-month data, things are looking really hopeful. Month of April – Month iThere was an increase of 0.3% from 1.2% in March. And this is the lowest level since August,
It is worth noting that March’s jump came after the Russian invasion of Ukraine in late February and a jump in oil and food prices. Brent crude oil rose from about $91 a barrel in late February to more than $120 in March. A similar jump was observed in wheat as well. Both Russia and Ukraine are important in the oil and wheat trade.
Now the question is, how soon will the prices of these two key ingredients return to normal levels? It is difficult to say, but the end of the Ukraine-Russia war will certainly help matters.
Credit: www.forbes.com /