U.S. Economy Stands Strong After Stock Market Crash and Crypto Correction

The U.S. economy, despite what many think, is experiencing relatively strong growth, which may come as a surprise to many.

In June, the Federal Reserve’s main inflation measure exceeded expectations. As a result, S&P 500 futures maintained strong overnight gains while investors considered the implications for the upcoming Fed meeting and potential rate cuts.

The personal consumption expenditures (PCE) price index rose by 0.1%, meeting forecasts, while the annual headline inflation rate decreased to 2.5%, also matching predictions. The core PCE price index, which excludes food and energy prices, increased by 0.2%, higher than the expected 0.1%, with the 12-month core inflation rate holding at 2.6%, above the anticipated 2.5%.

Before Thursday’s data release, forecasts had indicated the Fed’s core inflation gauge would slightly exceed expectations in Q2 at 2.9%, compared to the forecasted 2.7%, but down from 3.7% in Q1. Additionally, GDP growth improved to 2.8% from the previous quarter’s 1.4%.

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Recently, Fed Chairman Jerome Powell has taken a dovish stance, noting the return of the disinflationary trend and a balanced labor market that poses no significant inflationary threat.

Additionally, the Bureau of Economic Analysis’s advance estimate revealed that the US gross domestic product (GDP) grew at an annualized rate of 2.8% in the second quarter, surpassing the 2% growth predicted by Bloomberg-surveyed economists.

This seems rather strange as many people expect american economy only to deteriorate with the current Fed policy (or atleast until they cut the rates). Especially given the fact that one day prior to this data the stock market crashed and lost over $1 trillion – a drop not seen in the past 2 years.

This also reflected on the crypto markets, which also saw a significant decline with Bitcoin dropping below $64,000. Nevertheless, BTC managed to recover to $67,150 after a 5% surge over the past 24 hours.

Alexander Stefanov