Dec Mullarkey
Managing Director, Investment Strategy and Asset Allocation
LinkedIn
In the second quarter, U.S. real GDP exceeded expectations and grew by 2.8%. One of its biggest drivers was personal spending, which has been robust. Even as households become budget conscious, increasingly abandoning brands and hunting for bargains, they continue to spend.
Nevertheless, growth is moderating from its strong showing last year. Inflation is slowly returning to target. The job market is quickly rebalancing. Meanwhile the unemployment rate has risen for three straight months and is now over 4%.
U.S. Federal Reserve Chairman Jerome Powell is particularly attentive to labor market dynamics. Pre-COVID, when he shifted the Fed from being model driven to data dependent, he highlighted that past reliance on models and overly precise inflation targets may have prematurely hurt job growth, particularly for those at lower income levels.
For now, most data point to an economy that is slowing at a measured pace. To deliver a soft landing, rates will also need to start normalizing. A rate cut in September still seems likely.
Sources: Bloomberg, Financial Times, 2024.
The information may include statements which reflect expectations or forecasts of future events. Such forward-looking statements are speculative in nature and may be subject to risks, uncertainties and assumptions and actual results which could differ significantly from the statements. All opinions and commentary are subject to change without notice. SLC Management is not affiliated with, nor endorsing, any third parties mentioned within this article.
Market insights are based on individual portfolio manager opinions and market observations. These are observations only and are not intended to provide specific financial, tax, investment, insurance, legal or accounting advice and should not be relied upon and does not constitute a specific offer to buy and/or sell securities, insurance or investment services. Investors should consult with their professional advisors before acting upon any information posted here.
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