Issue 95 | Third Quarter 2024

As we pass mid-year, the US economy is beginning to show signs of stress, because inflation remains higher than hoped, the Federal Reserve remains effectively on hold, and the approaching election leaves fiscal policy uncertain.

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Previous Issues

Issue 94 | Second Quarter 2024

The first quarter of 2024 has seen higher inflation, especially in the super-core (services excluding energy and rent), which has raised concerns about a wage-price spiral. Despite this, hourly earnings have remained stable due to strong immigration inflows, which have loosened labor markets, particularly for lower-level jobs. Economic growth has slowed compared to the second half of 2023, but the consensus forecast for 2024, 2025, and 2026 is around 2.0%. The positive outlook is supported by sound corporate profit margins, rising stock prices, and narrowing credit spreads, which have provided liquidity similar to easing by the Federal Reserve. The election in 2024 will have economic consequences, depending on the outcome and resulting policy changes. Uncertainty surrounding the election has made CEOs more cautious. Manufacturing cycles typically last 18-24 months, and this cycle's upswing is just beginning. Nationalism could slow down its potential upside. Multinationals are making tough decisions about supply chain development, leading to slower supply growth.

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Issue 93 | Fourth Quarter 2023

Our view remains that the US, as the suburbs of a global economy, was first to shake off the COVID recession and the rest of the world is only now emerging from their doldrums. The global economy has been in the downdraft of a typical 3-year manufacturing cycle, and 2024 should benefit from a worldwide factory recovery. This recovery will be aided in part by falling prices for goods especially in dollar terms which makes them more attractive than still inflating services. That shift should benefit the emerging markets, as investment flows in their direction after a long drought.

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Issue 92 | Third Quarter 2023

Can the US economy trundle along at a muted rate of growth for several more quarters, despite high interest rates and a low unemployment rate or is a recession as certain as many forecasters insist Well, investors believe that the Fed is nearly done, after it skipped tightening in June. Despite a warning that a majority of the FOMC expected two more hikes in 2023, financial markets have less than one priced in but, with no cuts until next year. Meanwhile, the Congress has resolved the debt ceiling crisis, largely by agreeing to kick that can past the next election with the federal budget effectively locked down until then. What we are wondering aloud is whether a widely expected recession – which most believe will be shallow – cannot be avoided.

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Issue 95 | Third Quarter 2024

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Previous Issues

Issue 94 | Second Quarter 2024

Issue 93 | Fourth Quarter 2023

Issue 92 | Third Quarter 2023

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