by The Gould Asset Management Team
Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the Third Quarter of 2024. The excerpt is posted here for the benefit of our blog subscribers.
US Consumers Continue Spending, Employers Continue Hiring
US Consumers Continue Spending, Employers Continue Hiring
The US economy accelerated in the second quarter, driven by strong consumer spending. GDP grew at a 3.0% annualized rate in April through June, nearly double its first quarter pace.
The unemployment rate ticked down to 4.1% in September, as employers added over 250,000 jobs last month, the most since March.
Manufacturing activity remained subdued all summer, with weak demand and a slump in hiring. In a sign of potential rebound for the sector, though, new orders increased last month, and input prices fell to a nine-month low.
US home sales fell in August despite the recent decline in mortgage rates. Existing home sales declined 4.1% from a year ago, while the median sale price is up 3.1% over the same period.
Interest Rate Cuts are Here
The Federal Reserve opted for a bold start to its monetary easing, reducing the fed funds rate by 0.50% to a range of 4.75% to 5.00%, its first rate cut since 2020. Fed Chair Jerome Powell stressed that the more aggressive cut is not indicative of a less favorable economic outlook, but rather a decision to support the labor market.
Mr. Powell cautioned that the 0.50% rate cut does not imply a similarly rapid pace of rate cuts going forward. The Fed’s latest forecast shows two additional 0.25% rate cuts this year, aligning with current market expectations. In 2025, the Fed expects to reduce the federal funds rate by another 1.00%.
The Fed’s updated projections also show a slightly weaker labor market in the next year plus, raising their year-end 2024 unemployment forecast from 4.0% to 4.4%, where they expect it to remain through 2025.
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