Morning Market Brief: June 30, 2023

Morning Market Brief: June 30, 2023

U.S. first quarter growth revised higher?

A final reading of U.S. economic growth revealed the economy expanded faster than earlier estimates had shown. All signs point to the U.S. economy avoiding a recession, but uncertainty persists ahead, given a softening global economy, tight financial conditions and the likelihood of more interest rate increases. ?

  • A third and final reading showed U.S. gross domestic product expanded at an annualized pace of 2.0% in the first quarter of 2023. This is up from an earlier estimate of a 1.3% expansion but still below the 2.6% increase in the fourth quarter of 2022.
  • The increase in the U.S. economic growth rate was mainly in response to an upward revision in consumer spending and net exports. Despite tighter financial conditions, the U.S. consumer remains relatively resilient.
  • The U.S. consumer has been the main driver of economic growth in the U.S., benefiting from a robust labour market.
  • On the other hand, real estate investment fell over the quarter. The U.S. real estate market has weakened over the past year, but demand may be picking up. The National Association of Realtors announced U.S. pending home sales fell in May, primarily due to a low number of houses for sale.
  • U.S. Federal Reserve Board (“Fed”) Chair Jerome Powell recently commented the U.S. is likely to avoid a recession in 2023. That may give the Fed the opportunity to raise interest rates as it seeks to curb high inflationary pressures.

A robust U.S. economy bodes well for Canada’s economy since they are so highly connected. Conversely, economic conditions are softening elsewhere, which could hinder Canada’s economy and create some volatility in financial markets. In either case, you should position your portfolio for long-term success, regardless of shorter-term economic uncertainty.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.

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