U.S. economy is losing momentum

U.S. economy Has Been Losing Momentum in Recent Months

U.S Economy

Makassar – Bangbeli, The U.S. economy has been experiencing a slowdown in growth, but whether this is a recession or not is a matter of debate among economists. A recession is generally defined as two consecutive quarters of negative economic growth, as measured by the Gross Domestic Product (GDP). However, the National Bureau of Economic Research (NBER), the organization responsible for officially dating U.S. recessions, takes into account various economic indicators, not just GDP, to determine whether a recession has occurred.

In any case, it is clear that the U.S. economy has been losing momentum in recent months. The GDP growth rate slowed down from 6.7% in the third quarter of 2021 to 2.6% in the fourth quarter, and to 1.6% in the first quarter of 2022. The labor market has also been showing signs of weakness, with job growth slowing down and the unemployment rate increasing slightly. U.S. economy U.S. economy U.S. economy U.S. economy

The reasons for the slowdown are complex and multifaceted, and include factors such as supply chain disruptions, labor shortages, rising inflation, and the impact of the pandemic on consumer behavior. However, the U.S. government and the Federal Reserve have been taking measures to support the economy, such as fiscal stimulus, low interest rates, and asset purchases, which may help to boost growth in the coming months.


u.s. economy

The industrial side of the economy has indeed been experiencing a downturn, with manufacturing and freight transportation sectors being affected. The decline in container freight, diesel consumption, and industrial electricity sales are all indicators of this. However, the service sector, which makes up a much larger portion of the economy, is still reporting marginal growth.

It is worth noting that the situation is dynamic and subject to change, and the outlook for the economy is uncertain. The ongoing COVID-19 pandemic, supply chain disruptions, inflation, and other factors all contribute to this uncertainty. The Federal Reserve and the U.S. government continue to monitor the situation closely and take measures to support the economy.

the Institute for Supply Management’s (ISM) service sector index stood at 51.9 in April, indicating that more businesses reported expanding activity than contraction in the service sector. This is in contrast to the manufacturing sector index, which was just 47.1, indicating that more businesses reported contracting activity than expanding.

It is worth noting that the services index is generally higher than its manufacturing counterpart throughout the economic cycle, reflecting the fact that the service sector is a larger and more diverse part of the U.S. economy. However, both indices tend to move in broadly the same direction, reflecting the overall state of the economy.

While the service sector may be performing better than the manufacturing sector at the moment, it is important to note that the overall economic outlook is uncertain and subject to change. The ongoing COVID-19 pandemic, inflation, and supply chain disruptions all contribute to the uncertainty, and it will be important to monitor economic indicators closely in the coming months.

he ISM services index was in the 15th percentile for all months since 1997 in April, while the manufacturing index was in the 9th percentile. These percentiles indicate the relative performance of the two sectors compared to their historical levels, with lower percentiles indicating weaker performance.

While the services sector may be performing better than the manufacturing sector, these percentiles suggest that both sectors are currently facing significant challenges. The services sector is only just avoiding a contraction, and the manufacturing sector may have already entered a recession. However, it is important to note that these percentiles are just one way of assessing the current state of the economy and that there are other economic indicators that may provide a more complete picture.

The overall economic outlook remains uncertain, and the ongoing COVID-19 pandemic, supply chain disruptions, and inflation are all factors that may continue to impact the economy in the coming months. It will be important to continue monitoring u.s. economic indicators closely to gain a better understanding of the state of the economy.


More informally but fundamentally, economist Robert Shiller has likened recessions to “narratives” that spread similar to an epidemic through the economy (“Narrative economics”, Shiller, 2017).

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“A recession is a time when many people have decided to spend less, to make do for now with that old furniture instead of buying new, or to postpone starting a new business, to postpone hiring new help in an existing business.”

Some of the narratives associated with recessions have become more common in the last nine months, likely presaging a further slowdown in the business cycle.

Many prominent corporations have switched to focusing on efficiency, cost control and margins rather than growth. Investment is slowing and layoffs are becoming more common in at least some sectors of the economy.

The one strong area of the economy is the increase in nonfarm employment. But even here the gains are slowing and there are signs the labour market is starting to cool.

The number of people claiming unemployment benefits for the first time each week has begun to edge up from a multi-decade low in the third quarter of 2022.

While a more cautious approach to spending for an individual household or firm is rational, in aggregate it is recessionary.

In recent decades, recessions and mid-cycle soft patches have normally prompted the central bank to cut interest rates to spur more spending.

But with unemployment at multi-decade lows, employment costs rising, and limited spare capacity in the economy, central bank policymakers are likely to prioritise inflation control over supporting growth. Source : http://zawya.com

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