Signs of weakening economy
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It slowed to a standstill in the second quarter.
Worse, it declined because consumer spending on goods fell and housing investment cratered at a massive 14% annual rate.
Those are signs that the Federal Reserve's campaign to slow spending by raising interest rates is having an effect. If so, the slowdown will only worsen in the months ahead as the Fed hikes rates further.
"Both business and household fixed investment contracted quarter on quarter, with the biggest declines seen in household fixed investment; this most likely reflects the rising cost of assets like vehicles over the last year, as well as the more recent slowdown in the housing market as interest rates rise," said Cailin Birch, global economist at the Economist Intelligence Unit.
In other words, the Fed raised interest rates, which led to higher rates on mortgages, which slowed the housing market, with trickle-down effects on the construction industry, home goods purchases, and everything else related. With inflation still far above the Fed's 2% target, more rate hikes and pain are in store.
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Other figures are not as negative as job growth continues. But it is mostly job growth related to recovery from the pandemic and getting people back to work.
The upside of the slow down in housing is that people not interested in selling their homes will not face the potential of increased property taxes because of inflated prices.
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