The US economy advanced by an annualized 2.9% in the fourth quarter of 2022, following a 3.2 % jump in the previous three-month period, above analysts’ estimate of 2.6% increase flash GDP report showed. The advance estimate showed the GDP growth mainly reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and exports. Imports decreased. Considering full 2022, the economy expanded 2.1%, following a 5.9% increase in 2021. The outlook for 2023 is very different however, as the effects of the Fed's biggest interest rate hike campaign since the 1980s weigh on consumer demand, business investment, inventories and the housing market, with market consensus pointing to an imminent recession.
US GDP expanded for the second quarter in a row despite high interest rates. Source: U.S. Bureau of Economic Analysis
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Open account Try demo Download mobile app Download mobile appSimultaneously data from the labour market and PCE inflation figures were released.
• Core PCE inflation: 3.9% QoQ. Expected 4.0% QoQ
• Jobless claims: 186vs 205k expected (190k previously), the lowest since April and is another sign of a tight labor market despite the Fed aggressive tightening path last year, challenging market bets that the US central bank will halt its tightening path before reaching the forecasted terminal rate of 5.25%.
• Continuing Jobless Claims: 1675k vs 1659k expected (1647k previously)
Initial jobless claims fell to 9-month lows. Source: Blooberg via ZeroHedge
• Durable goods: 5.6% MoM vs 2.5% expected (-2.1% MoM previously). It is the sharpest gain since July 2020. Transportation equipment, up four of the last five months, drove the increase, $15.5 billion or 16.7% to $108.1 billion. Excluding transportation, new orders decreased 0.1%. Excluding defense, new orders increased 6.3%.
When it comes to market reaction, index futures gained slighlty while US dollar strenghtened.
EURUSD pair pulled back to support at 1.0870 after today's US data pack. Source: xStation5
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