The US economy is showing signs of slowing down in the first half of 2024, feeling the squeeze from high interest rates and lingering inflation, according to a new report from Bloomberg.
Recent data paints a picture of cooling growth across multiple sectors.
Let’s break it down:
1. Consumer spending, the economy’s main engine, isn’t revving as high. The government cut its estimate of first-quarter spending growth to just 1.5% annually.
2. Businesses are tapping the brakes on equipment purchases. Orders and shipments of core capital goods (think machinery and computers) took a dip in May.
3. The job market is softening. More people are staying on unemployment benefits longer, hinting it’s getting tougher to land a new gig.
4. Home buyers are sitting on the sidelines. With mortgage rates near 7%, pending home sales hit their lowest point in over two decades.
5. The trade deficit widened to a two-year high of $100.6 billion in May. A stronger dollar isn’t helping US exporters.
Bill Adams, chief economist at Comerica Bank, summed it up: “The economy is operating in low gear in the first half of 2024 after above-trend growth in the second half of 2023.”
TRENDING: Housing Market Hits Record Low as Buyers Face Steep Hurdles
The Federal Reserve’s strategy of keeping interest rates high to fight inflation is clearly having an impact.
Borrowing is more expensive for everyone – consumers, homebuyers, and businesses alike.
Is the US economy falling into a recession?
1) GDP GROWTH SLOWED TO 1.3% IN Q1
2) 38 MONTHS OF INFLATION ABOVE 3%
3) $2 trillion deficits
4) $34.6 trillion NATIONAL DEBT – record
5) Monthly non-farm payrolls likely OVERSTATED in 2023 by 730,000 jobshttps://t.co/S5utRJW1rf— Global Markets Investor (@GlobalMktObserv) June 27, 2024
Looking ahead, the Atlanta Fed’s GDPNow forecast puts second-quarter growth at 2.7%, down from earlier estimates. While we’re not talking recession yet, the economy is definitely downshifting.
What to watch:
– May’s personal spending numbers (due out soon) could show a slight rebound.
– Keep an eye on how businesses adjust their inventory levels.
– The Fed’s next moves will be crucial. Will they keep rates high, or start to ease off?
The bottom line: The US economy is navigating some choppy waters. The next few months will reveal whether we’re headed for smoother sailing or if more turbulence lies ahead.
READ NEXT: Report: Almost Half of American EV Buyers Regret Their Purchase
