{"id":5683,"date":"2022-05-04T10:20:34","date_gmt":"2022-05-04T09:20:34","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/tomd\/2022\/05\/04\/news-in-review-54\/"},"modified":"2022-07-05T14:26:10","modified_gmt":"2022-07-05T13:26:10","slug":"news-in-review-54","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/tomd\/2022\/05\/04\/news-in-review-54\/","title":{"rendered":"News in Review"},"content":{"rendered":"
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“The American economy \u2013\npowered by working families \u2013 continues to be resilient in the face of historic\nchallenges\u201d<\/em><\/strong><\/p>\n<\/div>\n\n

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The US\neconomy contracted in Q1 as surging inflation and supply disruptions weighed on\noutput. A slower pace of inventory investment by businesses also weighed on the\ngrowth of the world\u2019s largest economy, as did fading government stimulus. The 1.4%\ndecline in gross domestic product in the first quarter marked a sharp turnaround\nfrom the 6.9% annual growth rate recorded in the final quarter of last year and\nis considerably lower than the 1% growth widely estimated by economists. <\/strong><\/p>\n<\/div>\n\n

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The figure was the first contraction since the height of the\npandemic in 2020. One of the US economy\u2019s main drivers in Q1 was consumer spending, increasing by 2.7%,\na slight acceleration from the end of 2020. However, high inflation is eroding\nhousehold purchasing power, as consumer prices rose by 8.5% in March, a\nforty-year high. <\/p>\n<\/div>\n\n

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Following the unexpected negative data, President Biden insisted the US economy remained strong, “The American economy \u2013 powered by working families \u2013 continues to be resilient in the face of historic challenges. Last quarter, consumer spending, business investment, and residential investment increased at strong rates. The number of Americans on unemployment insurance remains at the lowest level since 1970.”<\/em><\/p>\n<\/div>\n\n

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When the Federal Reserve next meet\non 4 May, there are expectations that the decision will be made to raise policy\nrate by fifty basis points as the tight labour market and surging inflation\nweigh heavily on the economy.<\/p>\n<\/div>\n\n

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Eurozone inflation edges higher<\/strong><\/p>\n<\/div>\n\n

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Meanwhile, closer to home, data\nreleased last week showed eurozone\ninflation reached a new record high in April.\nFor the nineteen countries in the eurozone, inflation surged to 7.5%, adding\npressure on the European Central Bank (ECB) to tighten policy. Escalating fuel prices weighed on the region’s economic recovery. The\nApril figure tops the old record of 7.4% recorded in the previous month. ECB President Christine Lagarde reiterated that\nthe eurozone would adopt a more \u201cgradual\u201d <\/em>approach than the Federal\nReserve to stamping out inflation. Despite this, there are expectations that\nthe ECB may raise rates for the first time in a decade as soon as July.
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UK\ngovernment borrowing halves <\/strong><\/p>\n<\/div>\n\n

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Data\nfrom the Office for National Statistics (ONS) shows that during the last\nfinancial year government borrowing more than halved versus the same period a\nyear earlier, when the UK was in the middle of pandemic restrictions. The\n\u00a3151.8bn borrowed in the financial year ending March 2022, was under half\nthe \u00a3317.6bn borrowed in 2020-21. Since pandemic schemes,\nincluding the Job Retention Scheme ended, the government has clearly borrowed\nless. In addition, the government received stronger than expected revenues from\ntaxes, with receipts at \u00a3619.9bn for the fiscal year, an increase of \u00a394.3bn.\nIn March, borrowing totalled \u00a318.1bn, well above pre-pandemic levels and the\nsecond-highest amount for the month since records began in 1993, but still \u00a38.8bn\nless than the amount borrowed in March 2021.<\/p>\n<\/div>\n\n

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MPC – rates on the rise?<\/strong><\/p>\n<\/div>\n\n

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With the next Monetary Policy\nCommittee (MPC) meeting taking place on 5 May, the decision on Base Rate, voted\nby the nine-member committee, is imminent. The rate has been rising\nincrementally over the last few months and following three consecutive hikes,\nits current level is 0.75%. As the\nBank of England takes action against soaring inflation, a vote to increase the\nrate again by 0.25% would see it reach levels not seen since 2009.<\/p>\n<\/div>\n\n

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House prices continue their ascent<\/strong><\/p>\n<\/div>\n\n

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The latest Nationwide House Price Index\nhas revealed that average house price growth has slowed in the year to April to\n12.1%, from 14.3% recorded in March. Despite the reduction in growth, it\u2019s\nstill the eleventh time in the last twelve months that the rate of annual\ngrowth has been in double digits, putting the average value of a UK property at\n\u00a3267,620. Nationwide’s Chief Economist Robert\nGardner commented on the data, \u201cHousing market activity has remained solid\nwith mortgage approvals continuing to run above pre-COVID levels. Demand is\nbeing supported by robust labour market conditions, where employment growth has\nremained strong, and the unemployment rate has fallen back to pre-pandemic\nlows. With the stock of homes on the market still low, this has translated into\ncontinued upward pressure on house prices.\u201d <\/em><\/em><\/p>\n<\/div>\n\n

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He continued, \u201cNevertheless, it is\nsurprising that conditions have remained so buoyant, given mounting pressure on\nhousehold budgets which has severely dented consumer confidence.\u201d<\/em><\/p>\n<\/div>\n\n

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Here to help<\/strong><\/p>\n<\/div>\n\n

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Financial advice is key, so please do not hesitate\nto get in contact with any questions or concerns you may have.<\/p>\n<\/div>\n\n

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The value of\ninvestments can go down as well as up and you may not get back the full amount\nyou invested. The past is not a guide to future performance and past\nperformance may not necessarily be repeated.<\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

“The American economy \u2013 powered by working families \u2013 continues to be resilient in the face of historic challenges\u201d The US economy contracted in Q1 as surging inflation and supply disruptions weighed on output. A slower pace of inventory investment by businesses also weighed on the growth of the world\u2019s largest economy, as did fading […]<\/p>\n","protected":false},"author":12,"featured_media":6724,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,112],"tags":[],"hd_content_source":[116],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/5683"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/comments?post=5683"}],"version-history":[{"count":1,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/5683\/revisions"}],"predecessor-version":[{"id":6693,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/5683\/revisions\/6693"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media\/6724"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media?parent=5683"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/categories?post=5683"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/tags?post=5683"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/hd_content_source?post=5683"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}