The U.S. economy has been experiencing a steady growth despite the leading economic index falling 0.8% in October and declining for the 19th month in a row. Economists had forecast a 0.7% drop in the index, but the U.S. appears no closer to a recession than when the losing streak began.
The key factor keeping the economy growing is consumer spending, which has been steadily increasing even as unemployment remains extremely low. This trend has offset negative effects of high inflation and rising interest rates. Despite this, the U.S economy grew at an impressive annual pace of 4.9% in the third quarter, indicating that there is no impending breakdown in sight yet. However, with interest rates at their highest level in years, it will be challenging for the economy to maintain its momentum and sustain growth into the future.
Looking ahead, economists expect elevated inflation, high interest rates, and contracting consumer spending due to depleting pandemic savings and mandatory student loan repayments to tip the U.S economy into a very short recession according to Justyna Zabinska-La Monica senior manager of business cycle indicators at The Conference Board .
Despite these challenges, stock markets reacted positively on Monday as both Dow Jones Industrial Average DJIA and S&P 500 SPX rose during trading hours.