Containers are piled up on the deck of the ongoing cargo ship Seamax New Haven on October 13, 2021 at New York Harbor in New York City, USA.
Brendan MacDermid | Reuters
The U.S. economic recovery has slowed sharply in the last three months, as products were usually left behind in busy ports, employers struggling to find workers, and consumers struggling to find workers. fought.
According to Dow Jones estimates, when the Commerce Department released its first estimate of annual GDP growth for the third quarter on Thursday, it could show an increase of only 2.8%.
Such numbers seemed perfectly fine in the pre-Covid era, but are actually the slowest pace since the recovery began in April 2020. The shortest but sudden recession In the history of the United States.
In addition, the economy may not have grown at all this quarter – the Federal Government of Atlanta. GDP Now Tracker reduced the estimate to 0.2%. The recent downgrade is the result of lower prospects for government spending and real net exports.
Economists, however, are not worried. They say that the slowdown is primarily the result of factors related to supply chain bottlenecks that can be mitigated and continued to recover in the coming months.
“Weakness is, above all, a function of supply distortion,” said Joseph Labolguna, chief economist in the Americas at Natixis. “The economy is still fundamentally strong and I don’t think this quarter reflects our destination.”
In fact, Natixis has a slightly rosy outlook on the number of GDP, which is the sum of the goods and services that the economy produces. The company expects growth to grow at a pace of 3.3%. This is a significant drop from a 6.7% increase in the second quarter, the lowest since the 2020 pandemic-damaged second-quarter plunge of 31.2%.
“At least when it comes to travel and leisure activities, things are healthier than they look, unless they’re fully reopened,” Laborguna said. “I don’t see this as a sign of what’s to come.”
CNBC Quick update According to a forecaster survey, the median growth forecast for the third quarter is 2.3%.
Still, the economy faces multiple challenges.
Dozens of ships Stuck in a clogged California coastal harborAccording to a recent Goldman Sachs quote, we are waiting for delivery of about $ 24 billion in goods. The bottleneck is that when a company is struggling to fill a vacancy, there is too much demand for goods over services. NS Record 4.3 million workers quit their jobs in AugustAccording to the Ministry of Labor, it leaves 10.4 million jobs in the economy.
Hope that supply chain problems will be resolved soon is diminishing.recently Dallas Federal Reserve Bank of Dallas Survey 41.3% of respondents believe it will take at least 10 months for the supply chain to return to normal, and 64.5% of Texas companies have seen supply interruptions or delays from 35.5% in February. Stated.
These problems are causing inflation to run. Near the highest point in 30 years As there are fewer commodities and the cost of materials continues to rise.
LaVorgna said she was worried about the potential for higher energy costs to impede future growth.
“Production is about 15-20% lower than it was before the pandemic,” he said. “There are so many recipes with higher energy costs that will hurt the economy even more than supply chain problems.”
In the meantime, expectations for growth have been readjusted.
Goldman Sachs lowered its GDP outlook several times, further down to 2.75% in the third quarter of Wednesday. The company has lowered its full-year 2021 and 2022 outlook to 5.6% and 4%, respectively, from the already lowered estimates of 5.7% and 4.4%.
Federal Reserve policymakers must face the simultaneous forces of slowing growth and rising inflation. Comparison with stagflation From the late 1970s to the early 1980s. Traders are raising bets when the Fed begins to raise interest rates again, and the federal funds rate market is currently expecting the first rate hike in June 2022 and at least another rate hike by the end of the year.
However, most economists have denied the possibility of stagflation and instead hope that a more normal sequence of situations will prevail.
This means that GDP accelerated significantly in the fourth quarter and then began to resemble the pre-pandemic US economy in 2022. For example, Jeffreys economists are seeing a third quarter coming in with a growth rate of 3.8% and giving way to a burst of 8% by the end of 2021.
Citigroup is aiming for growth of just 2.4% in the third quarter, but economist Veronica Clark said, “Roughly slowing down as a result of supply-side constraints rather than reflecting softening demand. I can summarize it. “
Third-quarter GDP growth isn’t very high, but it should improve
Source link Third-quarter GDP growth isn’t very high, but it should improve