A lukewarm stock market, soaring inflation and rising interest rates have left Americans less than optimistic about the state of the economy. According to a University of Michigan survey released last week, consumer confidence has plummeted, fueled by frustration over high prices.
To be clear, we are not in a recession, at least not yet. But signs of an economic downturn are popping up everywhere, in sectors from commodities to housing. Here’s what CNN Business reported last week:
Copper is widely used in building materials and faces increasing demand in a growing economy. That demand disappears when the economy shrinks.
Prices skyrocketed earlier this year when Russia, which accounts for 4% of global copper production, invaded Ukraine. Traders concerned about a shortage of stock began to hoard the metal. And now copper prices are falling.
“Copper prices are just beginning to anticipate global growth slowing,” Daniel Ghali, director of commodity strategy at TD Securities, told CNN Business’s Julia Horowitz.
Purchasing Managers Index
The Fed’s aggressive rate hikes are further depressing the mood.
“Business confidence is now at levels that would normally herald an economic downturn, increasing the risk of a recession,” Williamson said. CNN Business’ Julia Horowitz.
The June index saw a 14.4% drop since May as consumers became increasingly alarmed about inflation. About 79% of those consumers said they expected bad times for business conditions in the coming year, the highest level for that statistic since 2009.
The percentage of consumers who blamed inflation for eroding their living standards, 47% according to the June index, is just one percentage point lower than the all-time high during the Great Recession.
“Because higher prices are harder to avoid, consumers may feel they have no choice but to adjust their spending habits, either by replacing goods or not making any purchases at all,” said Joanna Hsu, director of Surveys of Consumers. . “The speed and intensity with which these adjustments occur will be critical to the trajectory of the economy.”
The bad news: It’s because traders are betting on a recession, said CNN Business’s Allison Morrow.
While US drivers felt the pain at the pump, they began to slow down this spring, causing demand to drop and prices to fall.
While a slump in demand could bring temporary relief, it also points to broader economic concerns.
“This morning’s market action is all about recession concerns,” Peter Boockvar, the chief investment officer at Bleakley Advisory Group, wrote earlier this week. He estimated the probability of a recession this year at 99% because ‘nothing is 100%’.
Prices have risen, putting home ownership out of reach for many Americans, and mortgage rates have risen following Fed rate hikes and a sharp rise in bond yields.
But Lennar, a homebuilder whose shares are down nearly 45% this year, reported better-than-expected gains on Wednesday and a 4% increase in new home orders.
Lennar’s CEO, however, remained cautious, saying in announcing the company’s second-quarter results that it is a “complicated moment in the market.”
Despite the slowdown in the housing market, experts hope it won’t spread to the economy the way the housing bubble burst in 2008.
“Banks are much better off now and they don’t give loans to people with no credit or bad credit,” Michael Sheldon, chief investment officer at RDM Financial Group at Hightower, told CNN Business’ Paul R. La Monica. “If a recession comes, the impact on housing could be mild. There aren’t as many imbalances as before.”
Julia Horowitz, Alicia Wallace, Allison Morrow and Paul R. La Monica of CNN Business contributed to this report.