U.S. GDP growth rebounds as interest rate cuts on the horizon; regional labor market slowing

U.S. real gross domestic product increased at a seasonally adjusted annual rate of 2.8% in the second quarter, up from a revised 1.4% in the first quarter. Expectations are for slightly lower growth in the remainder of 2024, but the "soft landing" without a recession is still possibility.

News on inflation is somewhat better than in our last Quarterly Market Report. The Personal Consumption Expenditures price index declined slowly but steadily throughout the quarter. The progress on inflation, coupled with the weaker national labor market, was enough to cause the Fed Chair Jerome Powell to send a strong signal that "the time has come" for rate cuts with September being the widely expected date of the first cut.

Both local and regional businesses report some declines in demand. While analysts on Wall Street are optimistic about the ability of lower interest rates to help support spending, that optimism has not yet filtered down to respondents to our Business Outlook Survey.

Local job numbers remain weaker than a year ago. Payroll employment showed some improvement compared to last quarter, however recent layoff announcements are not fully reflected in the data at this time. Local unemployment ticked up slightly, mirroring the increase in unemployment nationally.

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