Consumer sentiment hit record lows, with rising concerns regarding persistently high inflation. With inflation hitting a new 40-year high at 8.6% in May, an aggressive rate hike of up to 75 bps is very likely in the near term, and the Fed’s 2% inflation target seems to be a distant dream now. Such grim anticipation and lingering supply-demand inequalities have pushed the market into bear territory, as evident from the S&P 500’s 21.6% year-to-date decline.
While the World Bank has warned of a recession and slashed its global growth forecast, Joseph Brusuelas, the chief economist at RSM, said, “Right now, it looks like any talk of a recession is a 2023 story. My sense is the economy is going to slow, but only really back to its long-term trend growth rate of 1.8%.”
