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November 2023 #15292 Page #78
Surprising Resilience Tempered By Lingering Pressures in Quarter 4 By The Lesko Financial Services Team
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s the Fourth Quarter got underway, there were strong signs that the U.S. economy remains resilient, despite stock market volatility and consumers beginning to express some wobbles in confidence.
But the crisis in the Middle East, political divisiveness in the U.S., and chaotic developments in the House of Representatives make it difficult to get a handle on what to expect between now and the end of the year. It’s especially worrying when the tension-filled headlines spill over to rock the financial markets. The Hamas-Israeli conflict marked the return of stock market jitters and—in addition to the obvious humanitarian issues—also raised questions on a number of fronts, among them the future outlook for oil prices and production. Stocks initially fell as shock registered after the weekend attack on Israel, but they had bounced back by the end of the first trading day after the news became known. After a difficult year for both equities and bonds last year, most equity indexes are up so far in 2023. Yet, some market analysts are still predicting a correction by the end of this year.
Inflationary and other pressures The economic climate had previously turned gloomy during the last few days of September as a government shutdown looked inevitable. A deal culled together at the last moment averted that possibility but didn’t solve the underlying problems as a new fiscal deadline awaits in mid-November. The pessimistic tone lifted with some unexpectedly strong news on jobs and unemployment. The U.S. economy added a stunning 336,000 jobs in September—twice what forecasters had predicted. At the same time, job numbers from July and August were both revised upward. That would normally be greeted as good news. But with the specter of additional interest hikes looming, the booming job market has fueled the sense that the economy hasn’t cooled enough and could necessitate further aggressive moves by the Federal Reserve in its campaign to bring inflation down. High interest rates have already taken a big toll on the housing market with demand for mortgages all but stalled and consumers worrying about tighter credit and higher borrowing costs overall. Continued next page
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