The number of US consumers expecting a recession dropped to its lowest level since 2022 and optimism about equities hit a new high, according to The Conference Board’s October consumer confidence index.
Despite all that, the Federal Reserve cut its wholesale interest rate by 0.5% in September – the first reduction in four years.
“What I think motivated them to do a 50-basis point cut, despite this rosy outlook, is that the labour market had slowed down a lot when we looked at the data over the summer.”
The market was pricing in a near 95% chance of a 25-basis point rate cut this month.
But Valatsas was concerned investors were not factoring in all the risks, including the US election, which would result in a larger US fiscal deficit.
Watch Dimitris Valatsas discuss the state of the US economy ahead of its election, in today’s episode of Markets with Madison from Wall Street.
Get investment insights from executives and experts on Markets with Madison every Monday and Friday here on the NZ Herald, on YouTube and wherever you get your podcasts.
Sponsored by CMC Markets.
Madison and video producer Corey Fleming travelled Auckland-New York courtesy of Qantas.
Experience the Qantas difference on travel to North America, including direct flights from Auckland to New…
