When the world’s largest economy contracts for a second consecutive quarter, but the jobs market indicates resilience, Wall Street is divided on the implications.
The US economy contracted for a second consecutive quarter, intensifying debate about whether it has drifted into a recession at the hands of the US Federal Reserve.showed the economy contracted 0.9 per cent on a seasonally adjusted annualised rate
In the US, however, the task of identifying whether the economy is in recession falls to the National Bureau of Economic Research, which is unlikely to call a recession given the tight jobs market. Other notable economists are also sounding a bearish tone on the US and global economic outlook given the burst higher in consumer prices.
The US equity market traded 1.2 per cent higher on Thursday in New York, compounding a run of gains that has pushed the SUS government bonds rallied, sending the yield on the 10-year note 11 basis points lower, and extending a rally in the previous session as investors interpreted the Federal Reserve’s comments to indicate a less hawkish stance than feared.Fed this week raised its target range for the Fed funds rate to between 2.25 per cent and 2.
“While technically a recession, the details were a little stronger than the headline number suggests,” according to ANZ economists. The central factor underpinning the idea that the US economy remains relatively strong is the jobs market. A total of 372,000 new jobs were added in June, far more than economists were anticipating. The unemployment rate sits at an enviable 3.6 per cent.
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