![]() politics as both the Democratic and Republican parties point fingers and question the other party’s candidate. politics. With Donald Trump declaring his candidacy for president in 2024 and President Joe Biden saying he intends to run again, expect turmoil in U.S. This could benefit shippers by reducing their costs and also ease supply-chain bottlenecks. The fall in spot rates should meaningfully curtail the pricing power of transportation providers in 2023. economy, and trucking spot rates continue to ease. Supply-chain bottlenecks and freight rates should continue to ease. Trucking is the largest input into shipping costs across the U.S. economy continues to show positive relative and absolute strength, with consensus expectations for positive gross domestic product (GDP) growth in the fourth quarter of 2022. We continue to see some tailwinds for economic growth, including tight labor markets that support wage growth and consumer spending, and relatively healthy balance sheets for both companies and consumers.Ī true “pivot” by the Fed, should inflation metrics demonstrate consistent monthly declines, could ignite a sustained market rally. While it will take time for inflation to return to more normalized levels, new data is encouraging and indicates that the economy may have moved past peak inflation. Inflation, both nominal and core, should continue to slow. Consumer price increases eased in October and November, a sign that persistent inflation may be slowing. As inflationary conditions improve, we could see corporations and investors step off the sidelines and move back into U.S. Let’s review some reasons for optimism as we look ahead.īearish sentiment is pervasive at both the corporate and individual investor level. A challenging year for markets across many asset classes has led some corporations and investors to seek refuge in cash to ride out the volatility, where they are taking advantage of higher interest rates. While we are not out of the woods yet, we are beginning to see some positive catalysts that could brighten the outlook. Federal Reserve (Fed) has moved more aggressively than in any other rate-rising period since the 1970s.Īgainst this backdrop, and recognizing that interest-rate changes can have a lagged impact on the economy and corporate profitability, it may take some imagination to paint a constructive scenario for the U.S. Nowhere is this more apparent than in the United States, where the U.S. Their latest quarterly forecasts imply they now feel they will need a higher inflation-adjusted "real" rate to adequately brake the economy and win the inflation battle.Around the world, economies are slowing, with some developed markets likely already in recession, thanks in no small part to tightening monetary policies. They also plan to start cutting interest cuts well before inflation actually hits their goal, so as to prevent policy from becoming too restrictive given falling inflation. "We haven't gotten to a point of confidence about that yet," Powell said last week. THE FED'S OWN UNCERTAIN FORECASTSįed policymakers plan to stop raising interest rates once they are convinced inflation is headed down to the central bank's 2% target. "Given our view for slowing GDP growth in Q4, a shrinking imbalance between labor supply and demand, and still moderate core inflation, we continue to expect the (Federal Open Market) Committee to keep the fed funds rate unchanged at current levels," TD Securities analysts wrote, referring to the central bank's policy-setting committee.įed officials say their decisions will be guided by data that so far is delivering mixed signals, with continued labor market tightness even as the housing market appears to be weakening.Ī menu of potential risks and shocks ahead complicates the outlook further, including the broadening of the United Auto Workers union's coordinated strike against the three big Detroit automakers the resumption of student loan repayments next month, which could take a bite out of household spending and a rise in energy prices that, if sustained, could push inflation back up. The view of traders, and that of some economists, is that a faster loss of economic momentum and slowing jobs growth could forestall any further tightening and possibly trigger earlier policy easing next year.
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