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Don’t Forget! You Saw it in the
May 2024 #16298 Page #76
Adverti$$er
Economic Resilience Extends into the Second Quarter
By The Lesko Financial Services Team
he first quarter of 2024 ended on a positive note, which hopefully will prove to be a solid foundation for the remainder of the year. Despite lingering inflation, the U.S. economy continued to show resilience and added increasing optimism for the much-sought-after “soft landing.”
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By now, predictions of a recession have mostly receded, and indications of growth have fueled rallies on Wall Street. The latest word from the Federal Reserve, confirming three interest-rate cuts over the next nine months, pushed stocks to historic highs by the end of March. The DJIA, the S&P 500, and the Nasdaq all soared to historic highs at the end of the first quarter. In addition to the anticipated relief on rates, at least part of this rally can be attributed to ongoing investment and excitement over new developments in AI. Other sectors also showed growth. Oil rallied and gold reached historic highs. Job growth remained mostly strong. Corporate profits were also up. Economic analysts are now forecasting 2% growth for this year. One big drawback that remains is housing. Mortgage demand has plummeted due to high rates while low inventory continues to push prices out of reach for many first-time buyers. Rents in some markets have risen much faster than inflation and have added to household budget struggles.
Looking Ahead to Q2 At the beginning of Q2, many financial analysts believed the Fed would make good on its prior promise of three interest rate cuts this year. However, with March inflation numbers coming in higher than expected, those hopes were quickly dashed. The latest consensus is that the Fed will not lower rates until at least September and there might be only one, if any, additional reduction prior to 2025.
Other Possible Headwinds The job market is still strong but has experienced a few wobbles and modest wage growth can be a factor in ongoing inflationary pressures. Consumer spending was robust through last year but there are signs that it may be softening as well.
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