By Isaac Cohen*
US economic activity is entering the end of the year, according to the central bank, “rising at a strong rate.”
www.federalreserve.gov/monetarypolicy/files/monetary20181108a1.pdf
The expectation is that the rate of growth for the year as a whole will be around 3 percent, with unemployment remaining at 3.7 percent, the lowest rate in almost fifty years. If this vigorous performance continues into next year, by next summer, the present US economic expansion will become the longest on record.
By contrast, stocks and commodities are in simultaneous retreat into negative territory, while investors seeking refuge have pushed up bond yields. It is a worldwide rout, with the main stock markets, in the United States, Europe, China and South Korea, dropping more than 10 percent. For instance, in the United States, both the S&P 500 and the Dow Jones Industrial Average, the major stock indexes have lost all the gains of this year. The selloff started among the star performers, high technology stocks such as Facebook, Google owner Alphabet, Apple and Netflix, pushing down the Nasdaq Composite Index.
Additionally, on concerns about a slowdown in China and the potential damage of a trade war between the United States and China, commodity prices have also fallen. Copper prices are down more than 15 percent, for the third time in five years. Oil prices also dropped from $76 per barrel in October to $50 in late November.
It remains to be seen if these signs of stress in the markets will influence the expected decision by the Federal Reserve of another interest rate increase in December.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
