In this video Vladimir Ribakov of Traders Academy Club explains the recent 1.4% contraction in U.S. gross domestic product (GDP) for the latest quarter. He begins by defining GDP as the sum of consumer spending, industrial production, and government outlays, illustrating how everyday purchases contribute to the figure. Ribakov attributes the sharp decline to a combination of external shocks: the war in Ukraine and resulting sanctions on Russia, lockdowns and COVIDārelated disruptions in China, soaring oil and freight costs, and broader supplyāchain bottlenecks. He then discusses monetary policy, noting that the Federal Reserve and other central banks have been raising interest rates to combat high inflation, and evaluates whether a single negative quarter signals a recession, explaining that two consecutive quarters are typically required. Ribakov warns that continued sanctions, high oil prices, and limited Chinese output could keep growth weak, and that aggressive rate hikes may increase market volatility and challenge the current strength of the U.S. dollar. Finally, he links the economic data to the 2024 U.S. political landscape, suggesting the GDP drop will become ammunition for Republican attacks on Democrats, potentially intensifying partisan conflict. He invites viewers to comment, join his trading community, and stay tuned for further analysis.
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Hello traders, how are you? Vladimir here from Traders Academy Club, and in this video I would like to talk about the recent, uh, news. Let's say there is some big noise from the US and the US economy, and I'm talking about the GDP, their gross domestic product, which shows which contracted by 1.4% on the last quarter report and shows that the US economy is shrinking. Is that a beginning of a shrinking trend? Is that a beginning for some bad period? What does that really mean and what should happen next in order to balance that? But before I start to explain all these things, if you are new to this channel, welcome to our fantastic community. I would like to invite you to subscribe to the channel and to enjoy from all the content available here for you. And also invite you to our trading family, Traders Academy Club, where you will enjoy from our free VIP price action course, full price action course, real-time trading education And real-time trading ideas delivered to you with dedicated videos fully explaining the techniques behind the trades. And of course, track-recorded trading journal. Join us with the link below the video in the description or in the pinned message in the comment section. Now let's talk about the official numbers and what is really the GDP. It's big news, no doubt, right? It's big data. It's a big number. The 1.4% drop, it's massive. But what it means? So first of all, what is the GDP? GDP is, I would say, the broadest way to measure the economy. Now, how can you really measure an economy of such a huge country like the US, where we are talking about over $20 trillion of economical GDP? Circle. And the idea here is pretty much simple. It is the consumption, which in other words, what you and me, the consumers, how much we consume, how much money we go and spend. If you think about it, every single thing, it'sā well, every single step what we do, it's the GDP. the coffee we buy at Starbucks or at Costa or whatever the, uh, the name of the, uh, cafeteria you love to drink, uh, if it's the McDonald's we eat, uh, when we, uh, spoil the kids, orā and don't judge me by saying McDonald's, whatever the food you love, uh, or any other thing we do, the gym we go to, the haircut we got, the shoes we buy. the suitcase and whatever we go and we purchase, you name it, it all is the GDP. It is our way, the consumer, to contribute to the economical circle, how money flows in the country. Besides that, we have, of course, the production, how much the industrial production, the manufacturing production, how all that goes in the country, if everything is healthy. And the latest one is the government spending. So all that, I'm not going to get into the formula of how it is all calculated, but all these are very important essential factors to show how the economy is doing. Now, as you can see here on the, on the report, right, um, you can see some numbers behind directly from the economy.com website. Pretty detailed things, and here you can see also the chart. Okay, now for the first time since the pandemic, we got a negative zone. Now one quarter, one negative quarter shows that the economy is shrinking. Yes, especially when the previous report was way above six percent. Now this is dramatic change. However, it makes sense. The recent war and the sanctions on Russia from the US and around the world, and the current lockdown in China withā when they are dealing with the COVID inā with their own ways, all that affects the prices, right? Directly effect on the imports and the export, and afterwards it affects on our lives, the prices as we know them, the consumers. And when with the sanctions and the oil prices skyrocketing, and the delivery price to deliver everything costs much more expensive. Now with the lockdowns in China, a lot of things, a lot of the production is slowed down. No import on a very essential things to our lives, and all that affect the economy the way we know it. Indeed, therefore, so the the the the logical after all drop of the economical growth. However, there might be much more behind it because the Fed. Started the trend. Actually, not the Fed; there were other countries doing it before the Fed. But the Fed now and other countries also started some trend of increasing the interest rates. Why do they do that? In order to cool down, okay, the skyrocketing inflation. The idea is pretty much straightforward: let's bring the rates. Higher, so the money, uh, goes back in the, um, let's say, certain economical services and, and stays inside. Prices will cool down and people will spend more again. Question is, really? So fast? Um, so From the view of the Federal Reserve and from the view of the central bank, so one quarter, no, not a problem. You can look in the history, it was close to zero before in 2018, it was negative in 2020. So yeah, it recovers quickly and it doesn't show we are in recession. It needs more than one, more than 2 actually quarters in a row to really go and define a recession. However, that's a big red bulb. And if all these current sanctions would not be lifted, then how exactly the economy would go and recover? Oil prices will continue to stay so high, imports and exports would be directly affected. The situation in China doesn't help. Where will the recovery come from? Just by increasing the rates 0.25% or half percent? No. So the Fed isā they already did hint and they will very likely follow, will go on a fast rate hike. And that should be all around the world. That should be a trend all around the world. And the question, and this would, this should increase the volatility in the market. This should be the game of who will make it faster, who would go bigger first. And right now the US dollar is in the lead. It might be, however, because such things, such GDP doesn't help the USD for the longer run. So that might be the last run of the dollar, of the bullish dollar run, before things would go bad. And if these numbers we saw today would not really go and improve, then yes, the situation in the US and the impact it will have on the USD should not be that positive. And one thing is certain from all that, It's we are in 2022. We start to see already the mid midterm fights between the Republicans and the Democrats, and we already start to see more and more things coming out of Trump saying see you in 2024. Be sure this is the fuel. Write this these numbers. That's the real fuel of the Republicans. and their fight against the Democrats to show how all that happens in their service. Where happens after the, the worst of the pandemic, after the, all the, the worst of the economical situations, despite of, let's say, golden conditions to show an economical growth, that's what we get, a drop and a contraction in the GDP. Be prepared for some interesting tweets, fights, interviews, videos, whatever it will be between the Republicans and Democrats. For those of you who follow, very likely to assume fun is guaranteed. So that's pretty much what happens here with the GDP. I wanted to bring you my point of view to explain these little things, what happens behind, and I hope it helps. Let me know what do you think about this situation for those of you who are from the US or doing business with US, then let me know how do you think it will go and affect our lives. Please comment below in the comment section. And I would like to take the opportunity to thank you for your time watching this video. I wish you wonderful trading and I'll see you soon with more. Stay safe. Bye for now.
