February 6, 2024
The triple whammy of economic data has been released during the past two weeks. The question is—how did we do overall? We have already reported that economic growth for the 4th quarter came in at an estimated 3.3%, which puts the annual rate at around 3.1% before 4th quarter revisions. Overall, a very solid year of growth, especially considering we were forecasted to have a recession last year. Another example of predictions which have gone awry.
Next the Fed Reserve met and as expected held interest rates steady. As of now, it has been over six months since the Fed last raised short-term interest rates. While the growth of the economy represents positive news, we probably would have witnessed the Fed already lowering interest rates had we moved into a recession. The announcement after the meeting gave us the usual mixed signals as they indicated they would continue to weigh the data before making their next move, wording that did not stray far from what the markets were expecting.
That brings us to event number three on Friday of last week—the first employment data of the new year. In January, it was reported that the economy added 353,000 jobs, a number that blew away expectations. Plus, the previous month of data was revised upward by an additional 100,000+ jobs. The headline unemployment rate stood at a historically low 3.7%. The Fed has been watching wage growth carefully as this has been one of the “sticky points” of inflation. Wage growth was also higher than expected. So how did we do overall? Overall, our economy is still showing plenty of strength, and this gives us solid support for this year’s prediction of a soft landing instead of a recession. It does not bode well for interest rate cuts the next time the Fed meets in March.
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