The Atlanta GDPNow is Forecasting a GDP Shrinkage of 2.1%
Currently revised from a forecast of -1.0%
55% of Americans believed that the United States was on the brink or already in a recession, according to polling data from YouGov and The Economist. Even though that 55% of Americans were technically wrong, they now may be right, according to the data from the Atlanta Fed GDPNow tracker. The tracker is now indicating that the United States economy has shrunk by 2.1% during Q2 (which just ended two days ago), which would officially mark the start or the continuation of a recession.
An initial GDP estimate for Q2 will be released by the Bureau of Economic Analysis in late July. This is when we will know for sure whether or not the economy grew or shrunk. At this point, however, a recession wouldn’t be necessarily unexpected. Just look towards the given pessimism towards the economy.
A plethora of factors has obviously contributed to the economy’s downfall leaving Americans in a high-inflation environment. Judi Leahy, senior VP of wealth management at Citi Global Wealth, said, “It’s a perfect storm, with supply chains, interest rates, inflation, and the war in Ukraine—not to mention the pandemic.”
Not only has the general economy taken a hit, but the stock market as well. There is reportedly still room for further drops, according to many of the top economists. Judi Leahy made comment on this as well saying, “I think a lot of [the expectations of a recession] is baked in, but I think we might go a little bit lower in the market.”
During Q1 and Q2 of 2022, the S&P 500 shed nearly 20% leading it into a bear market. The best news any investor can hear is that historically speaking, there is little or no correlation between the market’s performance in the first half and the second half. Possibilities of a market turnaround become more clear day-to-day.
Even if there is this reversal, many companies still point to a rough economic environment ahead.
“I have to underscore that we are in serious times here, and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets.”
A Meta Memo, from Chris Cox, said.
Back to Judi Leahy, suggests that the average consumer should stick to age-old advice. Weather the storm because this too, shall pass. She said, “We’ve seen that, historically, the market will rebound. If you take your money out now, you’re booking a loss—but right now, it’s only a paper loss. Remember to ask yourself: Where do you think the economy will be in three or five years?. There’s going to be another expansion down the road. It’s just a function of when.”