IEI - Final Approach: May 2023 Economic Update

2023-05-18 03:59:00 ET

Summary

• There has been a lot of discussion in the media about whether the U.S. Federal Reserve can pull off a so-called soft-landing - cooling inflationary pressures without significantly hurting economic growth.
• The significantly restrictive monetary policy creates a high risk to economic growth, and could very well cause the U.S. economy to tip into a recession.
• The ISM Manufacturing Index, a gauge of manufacturing activity in the U.S., has remained below 50 for several consecutive months now, suggesting that manufacturing activity is already in contractionary territory.
• Equity markets could remain elevated as a result of investor sentiment in the near term, but as economic conditions further deteriorate, markets are likely to trend lower.

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