The U.S. economy grew 3.0% in the second quarter, according to the “second estimate” of Real GDP released by the Bureau of Economic Analysis (BEA), on August 29, 2024. Growth in the 1st quarter was 1.4%, a marked slowdown from the 3.4% observed in the fourth quarter of 2023. The robust second-quarter growth was driven by stronger consumer spending and investments. The latter was driven by increased inventories.
However, the U.S. labor market is cooling. Nonfarm employment rose by 143,000 in August after only gaining 89,000 in July. May and June numbers were revised downward as well. July inflation figures also point to a softer economy. These trends along with comments from the Fed suggest a rate reduction will be forthcoming at the FOMC meeting later this month.
Chair Powell has already signaled this, stating that the time for a rate cut “is approaching, and if we do get the data we hope we get, then reduction of our policy rate could be on the table at our September meeting.”
