US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24
1. Fed tightening has been significant, inflation is moving back toward target .
Fed tightening has been significant.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/acaafa802b4538d5acf5e47dd0769b3a.png/bigmoo)
Inflation has moderated after a boomy run.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/f8e85f0778903f7fa50511918f81047c.png/bigmoo)
Surge in goods prices is now behind us.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/af02e11da85b32e598b10cdb691944fa.png/bigmoo)
2. Labor demand has cooled, but job market remains tight.
Tight labor market usually matters the most for services prices.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/7d2e4b7486d2393ca6450902dead132d.png/bigmoo)
Job vacancies have come down but still show strong labor demand.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/f1e12647c840376f9560b1c86e706e74.png/bigmoo)
3. Economy has withstood tightening to date .
Fed has focused on core services ex. rent
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/cfd9cbe7b27d3ea6a1035ca2039a9985.png/bigmoo)
Inflation expectations remain mostly anchored to date
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/03a86b654c36384a93abb532d9196d88.png/bigmoo)
Housing demand has started to recover, supply remains low for now
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/838ec26f516333e38e7cdcc7c8ca0611.png/bigmoo)
Dollar and equity markets have reversed some earlier tightening
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/e568e62c9b8f3481b64cb2cd24fa0f1f.png/bigmoo)
Cushion from “excess saving” has come down significantly
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/809d7d21eba534e989931ac4b6cd3094.png/bigmoo)
Manufacturing soft patch continues, business surveys staying weak
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/e95e52176cf3317b8f14fa91797bc2c9.png/bigmoo)
Banks are tightening lending standards, businesses face higher costs
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/45e2aa615dc832b3acd6b308c6de1a17.png/bigmoo)
Improvements on supply side can help economy grow
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/9f4146aaa5e833d5b37e73854e694d77.png/bigmoo)
4. Recession won’t come yet, but risks remain.
![US Economic Outlook:Fed Stays on Hold Before Lowering Rates in 2H24](https://ussnsimg.moomoo.com/73219530/editor_image/19d9e87d0cc930dd8d2c2cbcaa1b157f.png/bigmoo)
5. Outlook summary
1)The Fed has seen progress on labor demand, wage inflation, and consumer price inflation.
2)Monetary policy is and will stay restrictive.
3)Economy is losing steam from fiscal support and “excess saving” .
4)Interest rates are higher and banks are tightening lending standards.
5)Labor market has been resilient—job openings are still high and unemployment is low
6)Inflation keeps moving down over time.
Wages need to keep cooling;
Inflation expectations can’t break higher;
Core services ex. rent is most important broad grouping.
7)Fed stays on hold before lowering rates in 2H24.
8)Recession risks remain notable.
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