Economists still see 50% chance of a recession this year
An overwhelming majority of business economists still see a 50–50 chance the U.S. economy goes into arecessionwithinthenextyear,accordingtoa new survey published by the National Association for BusinessEconomics.
About three-quarters of respondents, 71%, reported the odds of an economic downturn within the next 12 months is about 50% or less. That marks a sharp reversal from April, when about 44% projected a more than 50% chance of a recession within the year.
More than one-quarter of economists pegged the likelihoodofadownturn at25%orless.
The uptick in sentiment reflects rising sales and profits over the past three months. The survey indicates that the percentage of respondents reporting rising sales continued to outstrip those reporting falling sales. Businesses are also feeling more optimistic about future profits over the next three months.
The economists also noted that material costs continuedtofallatthe beginningofthesummer.
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Gas prices just saw their biggest one-day increase in a year
The national average price for a gallon of regular gasoline surged by 4 cents on Tuesday to $3.64, accordingtoAAA.
That marks the biggest one-day increase since June 7, 2022, according to a CNN review of AAA data. However, gas prices are much lower today than they were last summer, when they spiked above $5agallon.
The unwelcome shift higher in pump prices followsajumpinoilprices,whichhaveclimbedto three-month highs as part of a broader rally in commodities. Wheat and corn prices have rallied after Russian attacks on port infrastructure in Ukraine.
Cooling inflation, driven in part by easing gas prices,hasraisedhopesthattheUnitedStatescan avoidarecession.InvestorsarebettingtheFederal Reserve will soon be able to wrap up its inflation fight. And consumers have been feeling better, withconsumerconfidencehittingatwo-yearhigh inJuly.
A return of higher food and fuel prices could unravelthose positivetrends.
Fed hikes interest rates to 22-year high after brief pause
The Federal Reserve pushed interest rates to a 22year high Wednesday, one month after a brief respite in hikes during the central bank’s race to bringdownhistoricinflation.
TheFedhikeditsbaselineinterestraterangeby0.25 percenttoaspanof5.25to5.5percent.ItistheFed’s 11th interest rate hike since March 2022, a dizzying ascent from near-zero interest rates at the beginningoflastyear.
Inflation peaked at 9.1 percent annually last June, a 40-yearhighthatsparkedfearsofarecessiononthe horizon. Price growth has since fallen to 3 percent year over year as of last month, according to consumerpricedatareleasedbytheDepartmentof Labor.
Whilethisisamarkedimprovementfromthesame periodlastyear,Fedofficialsarewaryofpullingback on rate hikes before inflation is closer to the bank’s 2percentannualtarget.
While 0.25 percent doesn’t sound like a lot, incremental rate hikes can have a profound impact ontheeconomy—andAmericans’ wallets.
Souce:
https://thehill.com/business/4118411-fed-rate-hike-july-22-year-high/
US economic growth accelerated in 2nd quarter, exceeding expectations and quieting recession fears
U.S. economic growth accelerated over three months ending in June, blowing past economist expectations and tamping down concerns about apossiblerecession.
The U.S. gross domestic product grew by a 2.4% annualizedratetofinish thefirsthalfof 2023.
The results mark an advance from the 2% annualized GDP growth recorded over the previous quarter. That growth showed a cooling from the 2.6% growth displayed in the quarter beforethat.
The finding of 2.4% annualized growth over the three months ending in June demonstrates that economic growth has accelerated over that period, dispelling concern among some about a fast-approachingrecession.
Theheightenedgrowthstemsfromanincreasein consumer and government spending, as well as a jump in business investment in inventory, accordingtotheBureauofEconomicAnalysis,the federalagencythatreleasestheGDPdata.
Airlines say domestic fares are sliding and threatening to chill record revenue growth
Sky-highairfarewasaboonforU.S. airlinescomingoutoftheCovid-19pandemic.
But airline executives are now seeing lower domestic fares as carriers’ schedules swell and customers opt fortripsabroadovercloserdestinationsthatwerepopularduringthe pandemic.
DomesticU.S.airfareiscurrentlyaveraging$258foraround-tripticket,down11%fromlastyearand9%from 2019,accordingtofare-trackingcompanyHopper.Internationaltickets,incomparison,areup8%from2022 andare23%moreexpensivethan2019,averaging$958.ThelatestU.S.inflationreportshowedasharpdrop inairfare.
The shift marks a new chapter in airlines’ recovery from the pandemic and a potential challenge to domestic-focused airlines after the peak summer travel season, which traditionally fades in mid-August when schools reopen. That’s happening while corporate travel demand still hasn’t recovered to prepandemic levels.
An airline’s revenue per available seat mile is a measure of how much a carrier generates compared with howmuchcapacity itisoffering.
Souce:
https://www.cnbc.com/2023/07/27/airlines-say-domestic-fares-are-sliding-and-threatening-to-chill-record-revenue-growth.html