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August 2024 #16301 Page #62
Economy Still Signaling Growth at Mid-Year But Not Among All Sectors By The Lesko Financial Services Team
The U.S. economy at mid-year continued to show signs of continued resilience and growth— even if such strength remains uneven throughout all sectors. The labor market consistently added jobs in the second quarter but has not kept up with expectations and, more recently, showed signs of slowing. The report for June showed the U.S. added 206,000 jobs but that number was heavily boosted by government hiring. In addition, there were downward revisions to the job numbers for April and May, lowering the 3-month job growth average to 177,000, the slowest pace since January 2021. The unemployment rate also ticked up in June—a further signal that job growth may be slowing. Inflation numbers for May and June showed a return to a downward trend after increasing unexpectedly at the end of Quarter 1. The Federal Reserve viewed this as what chair Jerome Powell called “progress” but it has not been enough for the Fed to announce a definite date for interest rate cuts. The stock market is up for the year to date with the S&P 500 reaching historic highs on heavy gains in technology. In June, Amazon joined Google’s parent Alphabet, Microsoft, Apple and chip maker Nvidia as part of the exclusive $2 trillion club. Also in June, Nvidia hit $3 trillion and briefly became the most valuable company on Wall Street.
Third Quarter and Beyond Interest rates: Hopes for as many as three interest rate cuts by the Federal Reserve this year faded with the uptick in prices in March. The economic mood turned pessimistic as some analysts began to foresee the possibility of another interest rate hike. But optimism had returned by summer as prices began to ease and the Fed left rates unchanged for the seventh consecutive time in mid-June. Many Fed-watchers now believe the Fed will leave rates alone at its end-of-July meeting and are predicting a rate cut in September.
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