Monthly Economic Insights
Solid growth, positive earnings, and tamed inflation continue to signal resilience and momentum
October, 2024
In the last month, the economic indicators have painted a fairly balanced picture of the U.S. economy, suggesting overall resilience with hints of potential caution.
Unemployment is still very low at 4.1%, and has bounced around which may reflect some loosening in the labor market but it isn’t yet a cause for concern. The latest JOLTS data (Job Openings and Labor Turnover Survey) also points to a slight reduction in job openings, which could mean that while hiring demand remains healthy, companies are becoming more cautious about adding new roles.
Inflation appears to be moderating, with headline inflation at 2.4% and core inflation—excluding food and energy—at 3.3%. While core inflation is still above the Federal Reserve’s target, the downtrend is good for households and businesses. Strong consumer spending also supports the idea that people still feel confident in their financial situations, suggesting they haven’t been significantly discouraged by inflation pressures.
Corporate earnings season has kicked off, with initial reports from big banks coming in strong. Banks with investment banking divisions have seen a boost in deal-making activity as mergers and acquisitions have picked up.
Blackstone (the $1.1T alternative asset manager), in particular, has had an impressive quarter, investing $54 billion in the quarter, the most in two years, as buyers and sellers find common ground on pricing again. It’s a sign that some stability is returning to asset values.
Debt levels among consumers also remain reasonable, which is encouraging, as households and businesses aren’t overly leveraged. This fiscal responsibility, combined with an expected 3.3% GDP growth rate in the third quarter (according to the Atlanta FED GDPNow forecast), suggests the economy is on solid footing.
Growth at this level indicates a strong economy. Still, some are concerned that the market may be ahead of itself, as valuations seem elevated compared to historical norms.
Bottom Line: In terms of overall economic equilibrium, we seem to be in a balanced state where growth, inflation, and employment are in relatively stable positions. However, with a few indicators flashing caution, there’s a sentiment that the market might be slightly over-optimistic. Investors and businesses will likely watch closely for signs of cooling growth or tightening credit conditions, as these could affect the current equilibrium.
Overall, the economy seems steady with solid growth and moderate inflation, but there’s also a sense that we’re approaching a critical balance point, with further developments in employment, inflation, and consumer spending likely to set the direction for the coming months.
— Marcus Scott, CFA, CFP®, Chief Investment Officer (CIO) for Country Club Trust Company
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