JULY 29, 2024 – US GDP RISES 2.8 PERCENT IN Q2 DESPITE HIGH RATES
US gross domestic product, adjusted for inflation was up 2.8 percent in the second quarter, double the 1.4 percent recorded in the first quarter of this year. The GDP growth is impressive despite the consistently high interest rates, while, at the same time, the labor market has remained solid with inflation having cooled. Hopes are, the “soft landing” with inflation easing without setting off a recession, is on track. Forecasters are guardedly optimistic but are expecting growth to slow in the second half of the year.
On Friday, the core personal consumption expenditures index (PCE) was released for June, it was up 0.1 percent for the month and 2.5 percent from a year ago. The PCE is the preferred inflation gauge for the Fed and has been trending towards the Fed’s 2 percent target. This new data has created greater confidence for a September rate cut.
The Fed next meets this week when they are expected to start discussing when rates could move downward, likely in September. The CME Group’s FedWatch is hoping for additional cuts in November and December given the way the data is trending.