The U.S. witnessed one of the lowest unemployment rates of 3.5% in September allaying fears of recession in the wake of reported economic slowdown. The economic slowdown; an outcome of the continued US-China trade war has been one of the major reasons for lessening growth and investment and eroding business confidence. And any slowdown in the U.S. economy would not be without leaving an impact on the global economy.
Job increases in September were more than the required number to keep pace with increase in the working-age populace. Economists though expect another rate cut from the Fed before the end of the year.
The economic picture indicated a weak manufacturing sector and a few dismal economic surveys saw several shares slide down in the beginning of the week. However, the presence of a fairly resilient service sector alongside,eased worries of recession in the days to come, voiced Neil Shearing, one of the chief economists at Capital Economics.
A weak manufacturing sector was not limited to the U.S. alone; it had become a global problem. And in any case, economies of today were reliant more on the service sector rather than on manufacturing as in the earlier years.
Another economist pointed out to the steady yearly 2%-2.5% growth rate kept up by the country amidst growth rates slipping to a 0.5%-0% seen in European economies.
The state of American economy was however, important continued Mr. Shearing as being the largest global economy, any downslide was bound to impact the rest of the world.
As for the interest rates, Fed Chairman, Jay Powell was pushed by President Trump to undertake another cut in the rates in addition to the second rate cut brought by the Fed in the previous month. About 25 basis points were lowered by the Fed in the main target rate to let it rest in the range of 1.75%-2%.A third rate cut before the year-end is being expected by the markets too. Whether it happens, only time will tell!