US economy perception: currently still growing, future prospects uncertain, prices high

To understand the U.S. economy, the Philly Fed Index released recently is appropriate.

(1) The August Philly Fed Index is 53 in ISM terms, corresponding to a little over 2% growth in real GDP.
The U.S. economy is still growing. Employment is strong, and this is positive for Japanese stocks as well.

(2) The outlook for the economy six months ahead shows a sharp decline in sentiment.

There are major concerns about the economy’s outlook. The possibility of a recession is high. However, many still believe a recession can be avoided because employment remains solid.
Whether a recession occurs is a big issue. If a recession were to happen, Japanese stocks probably wouldn’t hold in, but for now in Japan, few expect the U.S. to fall into a recession. Many countries are suffering from energy shortages, but the U.S. seems to be less affected, perhaps.

(3) High prices
Price indices have not been this high since the 1970s. Moreover, while the economic indicators are softening, the price indices have remained high. It was the same during the Lehman Brothers crisis era as well.

High prices. Wages push inflation. Whether this will subside is crucial. If it does not subside, the rate hikes could continue even if it triggers a recession.

Viewed this way, if stock prices can stay solid, it implies no recession and inflation will ease. There is a view that even if U.S. employment softens somewhat, the labor market will not collapse. There is also a view that even without a U.S. recession, the cooling of China’s and Europe’s economies could help deflate prices, so things might go our way—but that may be wishful thinking.