United States Gross Domestic Product
Updated Daily. Report Quarterly.
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​Economic Outlook
2024 Second Quarter
A Path of Prudent Policy
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Fed’s dual mandate of full employment and moderate inflation ensures conflict at turning points. The challenge for the Fed is finding the balance to ensure the long-sought “soft landing” of the economy. The “higher rates for longer” policy led to gradually lower inflation while employment growth continued modestly. The prolonged elevation of interest rates will eventually result in a slower economy and lower employment. The Fed’s policy path will determine the depth of the economic slowdown. The trouble arises with housing: dramatically lower interest rates in response to the Pandemic fed the housing market. Excess housing demand over constrained supply drove housing prices and rents higher. The Fed faces the same risk as it seeks the timing for rate cuts: lower interest rates may again lift housing prices and limit disinflation. The prudent path is policy moderation.
For 2024, growth will approach 2.1%, below the consensus estimate of 2.4%. With inflation continuing to fade, it’s not evident that this level of growth will cause the Fed to overreact with monetary policy. The key risks are a material change in net exports caused by a lower dollar or geopolitical risks, as well as the durability of the consumer. While monetary policy was focused on inflation for the last two years, the focus will change to employment and wages. Should either deliver a negative surprise, expect the Fed to bring forward rate cuts. Until then, the mantra is a modest pace and marginal cuts. In a data science world, policymakers will depend on data.
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US Economic Dashboard
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