Where the U.S. economy stands halfway through 2024
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Illustration: Lindsey Bailey/Axios
The soft landing seems to have stuck, inflation has been frustratingly persistent, rate cuts will be slower to arrive than many thought, and small cracks are showing up in the growth outlook.
The big picture: That is where the U.S. economy stands as we pass the midpoint of 2024 — a year in which things have not gone quite according to plan, but the overall balance of conditions is, for now, favorable for both workers and investors.
- A series of elevated inflation numbers in the first three months of the year scared the Fed, and it now looks like only one or two rate cuts are on the way this year — down from three that were the consensus six months ago.
- But the job market has kept chugging along, and financial markets have taken the diminished rate cut outlook in stride.
By the numbers:
- ⬆️ The unemployment rate rose to 4% in May, from 3.7% in December. Three-month average job growth also increased, to 249,000 from 212,000 in the final months of 2023.
- ⬆️ The Fed's preferred measure of inflation, the Personal Consumption Expenditures Price Index, rose at a 3.3% annual rate in the first five months of 2024, from 2.2% over the final five months of 2023.
- ➡️ The Federal Reserve's target interest rate range was unchanged between 5.25% and 5.5%.
- ⬆️ The S&P 500 is up 15.2%. The 10-year U.S. Treasury yield climbed to 4.48%, from 3.87%.
Yes, but: The rise in the stock market has been extremely concentrated in a handful of companies poised to benefit from generative AI, as our colleague Felix Salmon noted recently. It's not being driven by rising valuations of companies in all corners of the economy.
- Meanwhile, even as the latest inflation data has looked a lot better than it did in the first couple of months of 2024, the jobs picture has been worse on the edges.
- The number of job openings keeps falling rapidly, and the unemployment rate is now 0.6 percentage point higher than at its recent low in the spring of 2023.
- Lower-income Americans appear to be particularly stretched, which is showing up in anecdotal reports from consumer-facing companies and higher credit card delinquency rates.
What's next: The May Job Openings and Labor Turnover report is out Tuesday morning and will show whether companies continued shelving job openings and what happened with hiring and layoffs that month.
- Friday, the June jobs report is due out, and a key question is whether the softness shown in May unemployment was a blip or part of a trend.
The bottom line: All in all, it was a pretty solid first half for the U.S. economy, even if not precisely in the ways that forecasters predicted.
