US Macroecomic Report - September 2024

Signs of Deceleration:

Our US Economic Cycle Indicator signals that the US economy is decelerating from a significant peak. This month, key indicators show:

• Unemployment: Decreased by 0.1%
• Inflation: Declined by 0.37%, though it remains above the 2% target
• Short-term interest rates: Fell by 0.37%
• Long-term interest rates: Dropped by 0.13%

While inflation is moderating, it still exceeds the 2% benchmark. The labour market, despite being near cycle highs, is gradually weakening. Year-over-year data highlights a notable shift in sentiment, which has improved by 10.87%, while the labour market has deteriorated the most, declining by 5.25%.

Outlook: Continued Weakness in the Labour Market

We expect this weakening trend in the labour market to continue, driven by a slowing credit impulse, which has already fallen to the 29th percentile. As credit tightens, we anticipate further reductions in inflation, which will likely lead to lower interest rates. This deceleration will also impact US economic growth, bringing it back below its current above-trend pace.

Conclusion:

In summary, while the economy is still growing, we see signs of cooling ahead, particularly in the labor market and inflation, which will influence future monetary policy decisions.