fbpx Skip to main navigation Skip to content

Stocks, GDP, and Inflation: In a not completely surprising move this past week, the Federal Reserve announced that it would raise interest rates by three-quarters of a percentage point for the second straight month as it continues to aggressively fight the highest inflation in four decades. The 12-member Committee unanimously approved the increase and signaled in a statement issued after its two-day meeting that it expects to make “ongoing increases.” The Fed noted supply and demand imbalances related to the pandemic, high food and energy prices, and broader price pressures despite strong job gains.

It’s also true that the Gross Domestic Product (GDP), which is used to measure the U.S. economy, hit a fairly significant low this week at -0.90. However, when we look at stocks, there’s a possibility that the crash might not last too long. When we crashed in March 2020, all stocks didn’t crash at once (see chart below). There was an initial spike of stocks hitting their 52-week lows on March 9, then more stocks hitting their lows a few days later, followed by smaller spikes.


Why is this important? Well, it’s a similar pattern to this year’s crash. In the chart below, you can see how the number of stocks reaching their first week lows spiked early in March, followed by a peak in mid-May, and then small spikes following.

We may not have bottomed out completely yet, but history can be helpful to remember. So while this is a bit in the weeds of our current economic state, it provides a fuller picture than what you may read daily.

Business Briefing

  • Limiting Gas Consumption: European Union energy ministers agreed to call for members of the trading bloc to voluntarily reduce their natural-gas consumption by 15 percent by spring. The deal came a day after Russia’s state-owned gas monopoly, Gazprom, said it would shut down another turbine for repairs and further cut deliveries. The Kremlin blames sanctions over its invasion of Ukraine for the cutbacks, while Western leaders have accused Moscow of blackmail. (The New York Times)
  • Walmart Prices Even Lower: Last week, Walmart announced it would cut prices on some clothing, electronics, and other items to clear out inventory backlogs as the highest inflation in four decades forced shoppers to spend more on food and other necessities. (CNN)
  • Apple Gains: On Thursday, Apple reported an 11 percent drop in quarterly profit but said iPhone sales continued to grow. The results are better than expected after supply constraints occurred from factory shutdowns in China to fight the coronavirus outbreak. Apple CEO Tim Cook told The Wall Street Journal, “We expect revenue to accelerate in the September quarter as compared to the June year over year performance.” (The Wall Street Journal)

 The End of an Era: While the shrinking economy is certainly towards the top of the news feed, another headline is the shrinking ice cream menu at traditional ice cream trucks. In a shocking announcement last week, Klondike released a statement that it is halting production of the Choco Taco, a taco-shaped ice cream snack on ice-cream truck menus for nearly 40 years. As Eater writes in its eulogy for the dessert, “For some people, the Choco Taco — a sugar cone shaped like a taco and stuffed with ice cream — was synonymous with summer nostalgia. It was arguably among the best options at any well-stocked ice cream truck, alongside firecracker popsicles and ice cream sandwiches.”