June 14, 2024

The economy seems to growing steadily at a 2.0-2.5% pace.  The economy continues to create jobs and wages keep growing and consumers continue to spend   As a result, we expect GDP growth of about 2.8% in the second quarter followed by 2.0% growth in each of the final two  quarters of 2024.

Given the GDP forecast above, we expect the unemployment rate to remain at 3.9% for the foreseeable future.  With monthly increases in both the labor force and payroll employment homing in on about 160 thousand, the unemployment rate should stay quite steady throughout 2024.

The core CPI inflation rate was 3.9% in 2023.  Slower inflation, but still not even close to the Fed’s 2.0% objective.  But as surplus liquidity in the economy disappears by spring, we expect  the core CPI to slide to 3.4% by the end of this year and then keep sliding to 2.6% in 2025.

We expect the funds rate to drop from 5.5% currently to 5.25% by the end of this year, and then to continue its descent to 3.5% by the end of 2025.

Stephen Slifer

NumberNomics

Charleston, SC