With the US economy slowing but still growing and inflation down as the Federal Reserve prepares to lower interest rates, the US appears to have dodged a recession, National Retail Federation (NRF) Chief Economist Jack Kleinhenz said.
“The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024,” Kleinhenz said. “Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation.”
Despite an “eventful August” with initial reports of rising unemployment and a slowdown in manufacturing, more recent data has “calmed fears of a deteriorating U.S. economy,” Kleinhenz said. “Concerns are now focused on the direction of the labour market and the possibility of a job market slowdown, but a recession is far less likely.”
Kleinhenz’s comments came in the September issue of NRF’s Monthly Economic Review, which said annualised gross domestic product growth for the second quarter has been revised upward to 3% from the original report of 2.8%. Consumer spending, the largest component of GDP, was revised up to 2.9% growth for the quarter from 2.3%. Spending has moderated this year after accelerating in the second half of 2023 but “the American consumer has been resilient.”
Year-over-year growth in the Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – was at 2.5% in July, unchanged from June and only half a percentage point above the Fed’s target of 2%.