{"id":12802,"date":"2023-11-06T13:59:32","date_gmt":"2023-11-06T13:59:32","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12802"},"modified":"2024-01-10T17:17:04","modified_gmt":"2024-01-10T17:17:04","slug":"gdp-surges-in-q3-auto-worker-strike-ends-fed-holds-rates-steady","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/gdp-surges-in-q3-auto-worker-strike-ends-fed-holds-rates-steady\/","title":{"rendered":"GDP Surges In Q3, Auto Worker Strike Ends, Fed Holds Rates Steady"},"content":{"rendered":"\n

In today’s Steady Investor, we examine the important factors affecting the market and what might lie ahead, including:<\/p>\n\n\n\n

\u2022 U.S. GDP growth surges
\u2022 Higher labor costs hit
\u2022 The Federal Reserve holds rates steady<\/p>\n\n\n\n

U.S. GDP Growth Surges in the Third Quarter<\/strong> \u2013 According to the Commerce Department data released late last week, the U.S. economy expanded at a 4.9% annual rate in Q3, which was more than twice as strong as growth posted in the previous quarter. So much for the near-unanimous consensus that the U.S. economy would enter a recession in the second half of 2023. The fact is, the economy went the other way and accelerated<\/em> when nearly every expert expected a contraction. We have written before that we think the recent uptick in long-duration interest rates is tied to this better-than-expected growth. Yet even with this strong economic performance, many headlines referencing the GDP numbers struck a cautionary tone, with many pointing out that U.S. growth was driven largely by consumer spending that does not seem likely to last. Some point out that student loan payments are yet to take a bite out of disposable income, and others point to real disposable personal income (which is income adjusted for inflation) has fallen in recent months.1<\/sup><\/p>\n\n\n\n

Dealing with Market Volatility?<\/a><\/span><\/strong><\/p>\n\n\n\n

The challenge that investors face is not finding a way to eliminate volatility\u2014it is
developing a disciplined and mental approach for facing it.<\/p>\n\n\n\n

Our exclusive guide, \u201cHelping You Manage Market Volatility,2<\/sup><\/em>\u201d will help you better handle volatility and answer certain questions, such as:<\/p>\n\n\n\n

    \n
  1. Market downturns can and will occur, but what should you do?<\/li>\n\n\n\n
  2. How can diversification help you manage volatility without compromising your returns?<\/li>\n\n\n\n
  3. When volatility is too much for you to handle, how can a money manager help?<\/li>\n\n\n\n
  4. Can volatility actually be an opportunity?<\/li>\n<\/ol>\n\n\n\n

    If you and $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!<\/p>\n\n\n\n

    Download Zacks Volatility Guide, \u201cHelping You Manage Market Volatility.\u201d2<\/sup><\/a><\/span><\/strong><\/p>\n\n\n\n

    Real Personal Disposable Income<\/strong><\/em><\/p>\n\n\n\n

    \"\"
    Source: Federal Reserve Bank of St. Louis3<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n

    What\u2019s missing from this narrative is that American workers continue to benefit from a strong labor market and pay raises, even if those higher wages are not as compelling as they were last year. Employers spent 1.1% more on wages and benefits in Q3 compared to Q2, which was slightly better than the previous quarter-over-quarter growth of 1%. Other reasons given for \u2018unsustainable\u2019 economic growth are rising interest rates and wars in the Middle East and Ukraine, but we would argue these headwinds are already priced into equity markets and neither seem likely to derail the global economy \u2013 at least for now.<\/p>\n\n\n\n

    Auto Workers and Detroit\u2019s Big Three \u201cStrike\u201d a Deal <\/strong>\u2013 After inking deals with Ford Motor and Chrysler parent Stellantis, the United Auto Workers (UAW) reached a final deal with General Motors to end what had been a six-week strike. Labor prevailed in this case, and the automakers will also benefit from having all factories fully back up and running. The tentative agreements will include a 25% pay boost over four years, which could bring top hourly pay for production workers to $42\/hr (including cost-of-living adjustments). All told, unionized workers should expect annual income to land in the mid-$80,000s with the new raises, which doesn\u2019t include overtime pay. For the automakers, higher labor costs will of course pressure margins and require renewed efforts to increase productivity and contain other costs. But it\u2019s also true that labor costs make up a relatively small percentage of the overall cost of producing a vehicle, so we shouldn\u2019t expect to see a major impact on earnings forecasts based on this labor deal alone.4<\/sup><\/p>\n\n\n\n

    As Expected, the Federal Reserve Holds Rates Steady<\/strong> \u2013 The Federal Reserve convened this week to determine their next monetary policy decision, which as expected was to hold the benchmark fed funds rate steady at a range between 5% and 5.25%. Fed officials have now \u2018paused\u2019 rate increases at two consecutive meetings, which marks the longest stretch without a rate increase since they started their tightening campaign in March 2022. The Fed was weighing several factors during this week\u2019s meeting, which included an economy that accelerated in Q3, a sharp uptick in long-duration interest rates, and inflation that continues to cool \u2013 albeit at a slower pace than previously. The Fed likely considers the downtrend in inflation and higher long-term interest rates as two factors working in the right direction, since the former means their primary objective is being addressed and the latter implies tighter financial conditions looking ahead.5<\/sup><\/p>\n\n\n\n

    Facing the Market\u2019s Downturns<\/strong> \u2013 In a world of high inflation and volatility, the challenge for many investors is understanding how to react to it. It is important to remember that volatility is a normal part of the market flow.<\/p>\n\n\n\n

    Our volatility guide, \u201cHelping You Manage Market Volatility,\u201d6<\/sup><\/a><\/span><\/strong> will provide you with insights and answers to questions, such as:<\/p>\n\n\n\n

      \n
    1. Market downturns can and will occur, but what should you do?<\/li>\n\n\n\n
    2. How can diversification help you manage volatility without compromising your returns?<\/li>\n\n\n\n
    3. When volatility is too much for you to handle, how can a money manager help?<\/li>\n\n\n\n
    4. Can volatility actually be an opportunity?<\/li>\n<\/ol>\n\n\n\n

      If you and $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"

      U.S. economy expands at 4.9% rate, auto workers and Detroit\u2019s Big Three reach a deal, Fed pauses rate increases for the second consecutive meeting<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12802","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12802"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12802\/revisions"}],"predecessor-version":[{"id":12805,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12802\/revisions\/12805"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}