After a batch or economic reports and market events, the recovery of the US economic growth rate may appear soon. The optimism was spurred by the rate decision of the US central bank and the latest better-than expected initial jobless claims and manufacturing data.
Rising Economy?
The evident effect of the recent rate hike imposed by the Federal Reserve brought positive signals in the US economy despite the emerging doubts on the capability of President Donald Trump to push economic growth during his first few months in the office.
As expected the US central bank raise the target range for the federal funds rate to 1 to 1-1/4 percent after assessing the economic conditions. According to a released statement by Fed, job gains have moderated but have been solid, household spending has picked up, inflation has declined and near term risks to the economic outlook appear roughly balanced.
Indicating solid economic confidence, the Federal Open Market Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further.
FOMC posted:
The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.
On the other hand, President Trump surprised the market last week. Trump pledged to make America great again during his campaign and now his administration has recently showed how to America first after withdrawing from the Paris Climate Accord. Although there are some who questioned the decision of the president, others claim that the sustainability of the global initiative has just been boosted.
Economic Reports
The confidence in the forecasted economic growth was supported by the employment and manufacturing data released last week.
The U.S. Department of Labor beat the expected drop of initial jobless claims in the week ended in June 4. Initially, a 3,000 decline was forecasted but it turned out that it plunged by 5,000 to 237,000. Also, the New York manufacturing index improved in June, reflecting the business tone and the probable expansion of the economy.
While most of the market players were more than optimistic, the stability of the expected economic development was shaken a bit by the latest inflation and retail sales data. Based on reports, the core rate of inflation climbed at just 1.7 percent on year, marking the fourth straight monthly drop.
Nevertheless, the US currency shrugged off the negative sentiments and showed a significant recovery on Friday. The US stocks also finished moderately steady, with Nasdaq 100 Futures consolidating 0.15 percent higher and S&P 500 Futures advancing more than 0.10 percent on Friday session.
Overall, the currency market has started to rise from the bottom. The greenback was likely steady against the loonie and the yen. In case the upbeat economic report will continue to hit the market, then a third rate hike from the Fed will be reasonable. Should the current market condition and the positive outlook persist, the US economic growth rate will rise soon.