Recession talk but few signs it is imminent

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the endless talk of a looming global recession seems to be just that, talk.</p><p><a href="https://www.redbookresearch.com/" target="_blank"><strong>Retail sales in the US on a same-store basis</strong></a> were surprisingly firm last week, up more than +10% from year-ago levels. And while much of this will be inflation's effect, clearly not all, and there is real volume growth in these numbers. Wall Street is sanguine about prospects many big retailers too. There is a clear push to reduce inventories, which will help investor sentiment in this sector.</p><p>However, the latest <a href="https://www.conference-board.org/topics/consumer-confidence" target="_blank"><strong>consumer sentiment survey</strong></a>, this one from the Conference Board, sees levels slipping, and while they moving away from robust levels, they are now falling these are off mid-year highs. Prices are driving the sentiment there is an expectation a recession is ahead, they are clearly not there yet.</p><p>The <a href="https://www.dallasfed.org/research/surveys/tssos/2022/2211.aspx" target="_blank"><strong>Dallas Fed services index</strong></a> is still positive, but is is less so in November than October.</p><p>The Canadian economy expanded +0.7% in Q3 2022 from the previous quarter, a fifth consecutive quarter of growth, and taking the <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/221129/dq221129b-eng.htm?HPA=1" target="_blank"><strong>year-on-year expansion to +3.9%</strong></a> real which is reasonably impressive. Growth in exports, non-residential structures, and business investment in inventories were moderated by declines in housing investment and household spending. Exports increased +2.1%. This overall faster growth probably raises the chances of faster interest rate hikes there