U.S. economy returns to growth: ‘put some money to use here’


S&P 500 looks undecided this morning after the Bureau of Economic Analysis said the U.S. economy returned to growth in the third quarter of 2022.

What does it mean for the Fed?

U.S. GDP accelerated at an annual rate of 2.6% in Q3. In comparison, the Dow Jones estimate was a 2.3% growth instead.

Much of it, though, was related to a contraction in trade deficit that economists do not anticipate being a recurring event. So, today’s report says rather little about the overall prospect of a recession.

Nonetheless, it does put the debate around the Fed pivot to rest. On CNBC’s “Squawk Box”, Peter Kraus – the Chairman and Chief Executive of Aperture Investors said:

Federal Reserve is not going to bring rates down until we see inflation really cool. And inflation is not going to come down as fast as people want it to.

What does it mean for equity investors?

BEA is expected to publish its inflation data (Core PCE Price Index) for October on Friday.

Ahead of it, the Nasdaq Composite is down more than 30%. Kraus refrained from commenting on a bottom but said now was a suitable time to look for opportunities in the equities market.

I don’t think it’s a falling knife. Let’s take away the idea of buying the bottom because that’s impossible. Market’s down about 30%. Are you two-thirds of the way right? Absolutely. So, you’d put some money to work here. No doubt.

Prior to Q3, the U.S. economy had contracted for two straight quarter – a generally accepted definition of a recession.

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