Apparently, the global economy isn’t out of the woods yet: the S&P 500 posted a decline of 0.3% in the middle of February as stock values dropped. This is in contrast to the way retail sales went up at the beginning of the year, posting a growth of 3.0% and closing out the month at a record $697 billion. So far, this is Wall Street’s biggest gain since March 2021 and is a full percentage point higher than the 2.0% predicted by most experts.
The S&P 500 is currently up by 6.2% year to date, a good 14% higher than its record low of 3,577.03 in October of last year and lower by 15% than its high of 4,796.56 in January of the same year.
Despite this bit of good news, analysts remain wary as to which direction the economy is set to go within the coming weeks, prompting several firms to modify their forecasts for the near-term gross domestic product (GDP.) Among those who have made revisions are the Bank of America, Deutsche Bank, and JPMorgan.
The Atlanta Fed, in particular, expects real GDP growth to hit a rate of 2.4% towards the end of the current quarter, a 0.2% increase from their previous forecast and a somewhat optimistic revision given their original estimate of around 0.7%.
Likewise, Bank of America’s Global Fund Manager Survey noted that the odds of a recession occurring are down to 24% as of mid-February, quite a drop from the 77% it hit in the middle of the fourth quarter and the lowest they’ve been since June 2022.
Despite all the good news, many economists and financial experts remain pessimistic, particularly where surging inflation is concerned – and, to them, any good news about the economy may mean even more interest rate hikes in the near future.
For one thing, the US Federal Reserve itself declared that its previous claim that inflation had begun to recede was a premature call on the part of its executives. This statement was bolstered by recent reports regarding the prices of consumer goods as well as the overall cost of production.
For another, while economists confidently state that the bear market is over, they aren’t saying that the purported Great Reflation has begun. Indeed, experts refrain from referring to the market as either a bear or bull market, opting instead to keep an eye on any developments as they happen.