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Amid the ongoing battle against inflation, consumer sentiment has plummeted to it's lowest levels according to data from the University of Michigan. Joining Catalysts to discuss market outlooks in light of this development is LPL Financial Chief Economist Jeffrey Roach.
Roach notes that the sentiment report serves as a "confirmation" that "consumers are pivoting away from big-ticket items." This shift, he says, points to a potential consumer spending slowdown, though markets may not yet fully grasp "the magnitude quite just yet." Roach believes that the second half of this year could "run a lot slower" than the first half of 2023.
Amid high inflation and uncertainty surrounding potential Federal Reserve rate cuts, Roach suggests that the Fed is actively seeking "confirmation that the economy is slowing," which could prompt a pullback in their policy stance. However, he notes that markets are gradually coming to the realization "that the 2% target the Fed is looking for is going to take a lot more time," despite inflation heading in the right direction, according to Roach.
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