Investor fears regarding a potential near-term U.S. recession have subsided after revisions to economic data for the first quarter of the year showed that the economy grew faster than expected.
U.S. GDP growth was 1.3% in the first quarter of 2023, meaning that U.S. economic growth is yet to collapse since the coronavirus pandemic. Several major U.S. corporations reported strong Q1 earnings, with specialty clothing retailers Abercrombie & Fitch and Urban Outfitters reporting significant sales rises while Nvidia and Palo Alto Networks reported upbeat earnings forecasts, signaling that business-to-business sales are also proving strong.
Although a group of economists from Citi stated on Thursday that further rate hikes from the Federal Reserve may be needed in order to cool inflation, Fed Chair Jerome Powell revealed that there is a possibility that the central bank may pause its rate hikes, stating that he prefers to keep his options open ahead of the next policy meeting.
Federal Reserve Bank of Boston President Susan Collins expressed hope that rate hikes could be tamed, explaining: “While inflation is still too high, there are some promising signs of moderation. I believe we may be at, or near, the point where monetary policy can pause raising interest rates.”