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Last week, the release of the Personal Consumption Expenditures (PCE) Price Index provided further evidence that inflation is gradually moving toward the Federal Reserve’s (Fed) target.1 Additionally, the second-quarter gross domestic product (GDP) report revealed that the economy grew at a better-than-expected pace, with personal consumption showing more strength in Q2 compared to Q1.2 Jobless claims also decreased from 250,000 at the end of July to approximately 230,000 in August, easing recession fears that had gripped the market in early August.3
This week, the Institute for Supply Management (ISM) Manufacturing and Services Purchasing Managers' Indexes (PMI) will be released on Tuesday and Thursday, respectively.4 July’s Manufacturing PMI was weak at 46.8, but it is anticipated to edge up to 47.5.5 The Services PMI, which remained above 50 in July, is expected to stay in expansionary territory.6 Additionally, the August nonfarm payrolls report will be closely watched on Friday, especially after July’s weak jobs data sparked a brief recession scare. However, with Fed Chair Powell signaling a focus on a cooling labor market and a readiness to cut rates to support the labor market if necessary, the likelihood of a recession appears to be diminishing.
Sources:
1,2Yahoo! Finance – US economic growth for last quarter is revised up to a solid 3% annual rate; 8/29/24
3Reuters – US economy displays resilience with low layoffs, solid second-quarter growth; 8/29/24
4-6Morningstar – Preview — Barron's; 8/30/24
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