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November 2024 #16304 Page #90
US Economy & the Markets By The Lesko Financial Services Team
H
eading into the last quarter of the year, the US economy sent out several strong signals that is remains resilient and robust. Third quarter inflation continued a downward trend, with annualized numbers beginning to approach the Central Bank’s target. But softening of the job market over the summer months put additional pressure on the Fed to begin cutting interest rates after several sessions of remaining in “pause.” After a brief period of anxiety with calls for emergency action, the Fed finally enacted a 50-basis point rate cut at its regular September meeting, while hinting about possible additional cuts before the end of the year and into next.
Interest Rate Cut The long-awaited decision to begin cutting rates helped push what had been a volatile stock market to new historic highs with a rally many forecasters now believe has a chance of enduring through the last two and half months of the year. A surprising September labor report, with 254,000 jobs added, blew past expectations. Strong GDP growth of 3.0% in the second quarter, plus an upward revision to 1.6% in the first quarter of the year, helped ease many concerns. It took some of the urgency out of the Fed’s need to rush into further rate cuts and convinced many analysts that the Fed had accomplished the elusive goal many skeptics had doubted: a soft economic landing.
Inflation The year-over-year inflation rate dipped from 3% in July to 2.9% in August, and 2.5% in September. The most noticeable drop has been seen at the gas pump. The national average the first week of October was down to $3.17 per gallon, a drop of nearly 20% over the same time last year. Lower demand from consumers still dealing with the effects of inflation plus less post-summer driving overall helped bring prices down. Hurricane season and troubles in the Mideast are two possible tailwinds that could impact the price of oil in the next few months. Food prices have also seen relief, but housing costs remain stubbornly high.
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