Monthly Economic Insights
Markets rally and another rate cut expected
November, 2024
In recent weeks, U.S. economic indicators have presented a nuanced picture, highlighting positive trends tempered by ongoing cautionary signals.
The unemployment rate increased to 4.1% from 3.7% at the beginning of the year, suggesting a slight easing in the labor market. The latest Job Openings and Labor Turnover Survey (JOLTS) indicates a modest decline in job openings, implying that while hiring demand remains robust, employers exercised caution in expanding their workforces.
Inflation continued to moderate from the beginning of the year, though the headline rate increased slightly to 2.6% in the last month, and core inflation—excluding food and energy—remained steady at 3.3%. Although inflation remains above the Federal Reserve's 2% target, the downward trend favors households and businesses. Strong consumer spending persists, reflecting sustained confidence in personal financial situations despite lingering inflationary pressures.
Even with the latest inflation stability, market sentiment suggests a rate cut remains probable in December (current odds stand at 59%), driven by pressures to sustain economic growth amidst signs of slowing momentum in critical sectors. Another rate cut in December could provide welcome interest rate relief to borrowers and stimulate investment.
Markets have also responded positively to election results, signaling optimism about potential economic policy and governance shifts. Investors expect new lawmakers to balance spending reductions and tax cuts, offering the combined benefit of renewed fiscal discipline with more attractive investment incentives.
Bottom Line: The U.S. economy faces a mixed outlook, with stable core inflation providing a foundation for optimism. At the same time, the likelihood of a rate cut still reflects ongoing concerns about sustaining growth and keeping labor markets healthy. This will keep Fed watchers and markets on the edge of their seats as they anticipate the next move in monetary policy. Overall, cautious optimism persists amid challenges requiring steady monetary policy management.
— Marcus Scott, CFA, CFP®, Chief Investment Officer (CIO) for Country Club Trust Company
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.
The opinions and views expressed herein are those of the author and do not necessarily reflect those of Country Club Trust Company, a division of Country Club Bank, or any affiliate thereof. Information provided is for illustrative and discussion purposes only; should not be considered a recommendation; and is subject to change. Some information provided above may be obtained from outside sources believed to be reliable, but no representation is made as to its accuracy or completeness. Please note that investments involve risk, and that past performance does not guarantee future results.