Key Takeaways
- Economic maturation is expected to slow down successful nan 4th quarter, perchance making nan year’s last months its weakest.
- Consumer spending is expected to substance continued growth, while economists support an oculus connected a labour marketplace that is sending mixed signals.
- Sectors hardest deed by precocious liking rates are besides expected to show betterment arsenic nan Federal Reserve’s liking complaint reductions commencement to person an effect.
Economic momentum is projected to slow successful nan 4th quarter, but economists expect consumers will supply capable powerfulness to substance maturation done nan year’s end.
High liking rates, a slowing occupation market, and continued value pressures have weighed connected nan system truthful acold this year, but not capable to extremity it into a long-predicted recession. The Federal Reserve is shifting from fighting inflation to maintaining a historically debased unemployment rate. Meanwhile, market watchers, consumers, and businesses await nan result of nan November statesmanlike predetermination to get immoderate thought of nan guidance of fiscal policy.
Those factors could make nan past 4th important for nan trajectory of nan U.S. economy. Several analysts expect nan last quarter's Gross Domestic Product (GDP) to turn betwixt 1% and 1.5%. That would apt make it nan weakest 4th of nan twelvemonth but would debar an economical downturn.
Labor Market Weakness Could Weigh connected Economy
U.S. GDP accrued 1.6% successful nan first quarter, followed by a stronger-than-expected 3% successful nan 2nd quarter. Official numbers for nan 3rd 4th won't beryllium released until nan extremity of October, but projections by nan Atlanta Federal Reserve put it astatine 3.2%.
Economists judge nan superior resistance connected nan system could travel from nan labour market, wherever location person been signs of deterioration. Data from nan backstage assemblage showed unusually precocious layoffs and authorities search indicated slower hiring.
However, the intimately watched jobs report from nan Bureau of Labor Statistics earlier this period showed that nan unemployment complaint fell to 4.1% successful September and, surprisingly, employers created much than 250,000 jobs. That information could bespeak that nan labour marketplace whitethorn beryllium stronger than anticipated.
“This should put to rest—at slightest for nan adjacent month—the thought that nan system is astir to autumn disconnected a cliff aliases that imminent punishment is connected nan horizon,” said Chris Zaccarelli, main finance serviceman astatine Independent Advisor Alliance.
Consumer Spending Likely to Support GDP Growth
Economists expect user spending to stay resilient contempt questions astir nan occupation market. This is partially owed to a continuing deceleration successful inflation, which is easing value pressures crossed nan economy.
“The latest economical information continues to constituent to a gradual economical downshift, pinch consumers and businesses still spending but doing truthful pinch much prudence,” wrote Gregory Daco, main economist astatine EY-Parthenon.
Economists said nan Federal Reserve’s pivot to interest complaint cuts could besides boost GDP. Sectors for illustration housing, construction, and manufacturing person struggled pinch precocious borrowing costs and could spot a rebound.
“Some of nan sectors that person been battered nan astir by precocious liking rates are yet capable to summation traction again arsenic we move into 2025,” said Diane Swonk, main economist astatine KPMG.