Falling Prices | Weekly Excerpt February 13

The Fed hinted that there will be a drop in prices considerably this 2023 and, therefore, there is no need to be as aggressive with interest rate hikes. U.S. stock markets are pointing to a drop this Friday as investors welcome speeches from Fed officials, raising concerns about the bank's upcoming changes to its various interest rate settings.

Thomas Barkin, president of the Federal Reserve Bank's Richmond branch, was the latest official in charge of monetary policy to emphasize Wednesday how critical it is that the central bank continue to raise interest rates to combat inflation.

All three major indices are headed to end the week in the negative.

This week, the S&P 500 is down 1.3%, the Dow is down 0.6% and the Nasdaq Composite is headed for weekly losses of 1.8%. After Lyft, a ride-hailing company, revealed a surprise fourth-quarter loss and some disappointing projections, shares fell more than 30% before the markets opened because margins had been squeezed by rising costs.

As falling energy prices partially eliminated inflationary fears, the index reached its highest levels in eight months in January, rising to 64.9 points, its highest level since May and up from 59.7 points in December. All signs point to an increase, to 65 points, however, the first increase in jobless claims in six weeks, according to data released Wednesday, raises the possibility of a bad surprise.

United Kingdom

The UK economy just avoided entering a recession in Q4 2022, with data released earlier in the day on Thursday showing that the country's GDP stagnated in Q4 after declining by a revised 0.2% between July and September. Thus, the UK economy has seen consecutive quarterly contractions, which is what constitutes a technical recession. However, output only declined by 0.5% in December, suggesting that this is simply a delay of the inevitable.