by The Gould Asset Management Team Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the Third Quarter of 2022. The excerpt is posted here for the benefit of our blog subscribers.

Signs of Slowdown in the US

The US GDP contracted at a 0.6% annualized rate in the second quarter, marking the second consecutive quarter of negative growth. However, an alternative measure of economic activity, gross domestic income (GDI), increased at a 1.4% rate. The two measures tend to converge over time. A recession may be looming but there are signs that segments of the economy remain strong.

The job market remains red hot as the unemployment rate ticked down to 3.5% from 3.7% in September, which will do little to deter the Fed from its rate-hiking campaign.

The ISM manufacturing index fell to 50.9 in September, from 52.8, meaning the sector is still in expansion territory, but activity slowed more than expected. The decline was driven by sharp drops in new orders and job growth. Price pressures and supply bottlenecks appear to be easing though.

Consumer spending, which accounts for about two-thirds of US GDP, rose 0.4% in August. However, wage growth appears to be slowing and consumers are tapping excess savings to offset the effects of stubbornly high inflation.

Mortgage rates rose to their highest levels since 2008 and home prices remain high as affordability deteriorated further this quarter. New home sales increased unexpectedly in August, but existing and pending home sales continued their months-long declines.

To continue reading, please see our entire Economic and Market Review.