Highlights
“A frequent bright spot for the economy in recent years, the job market dimmed slightly in the 2nd quarter of 2024, with unemployment rising, labor force participation inching down, and uneven nonfarm employment growth.”
Summary
Domestic production exceeded expectations in the 2nd quarter of 2024, signaling a still-strong economy despite slower-than-expected progress on inflation and a slight softening in the labor market. In response, the Federal Reserve forecasted a more moderate approach to loosening its hawkish monetary policy over time, citing ongoing economic strength in the face of high interest rates. Broad increases in personal spending, private investment, and government spending all contributed to robust GDP growth in the 2nd quarter.
Inflation continued to moderate at a glacial pace, due in part to lower gasoline prices. Soft demand for fuels also held crude oil prices lower in the 2nd quarter of 2024.
A frequent bright spot for the economy in recent years, the job market dimmed slightly in the 2nd quarter of 2024, with unemployment rising, labor force participation inching down, and uneven nonfarm employment growth. Still, the labor market remains well within the bounds of full employment. Capital markets posted a mixed 2nd quarter despite the continued tailwind in the tech sector provided by emerging AI tools.
Housing market data indicated some softening. As sales continued to be constrained by elevated interest rates, unsold housing inventory rose in the 2nd quarter of 2024. Prices in major cities continued to rise.
FOMC members’ projections of domestic production and inflation reflected the data, wih both revised upward in the near term. Unemployment expectations changed little, as did projections of longer-term economic performance across all three measures.