In May, employers added 272,000 new jobs, surpassing economists’ predictions, but the unemployment rate ticked up to 4% for the first time in over two years. This raised questions about what the Fed would decide at their upcoming meeting regarding interest rates. While most do not predict a rate cut, several economic indicators, including GDP growth, inflation, retail sales, consumer sentiment, gas prices, mortgage rates, and home sales, suggest a mixed outlook for the economy.
GDP growth in the first quarter of 2024 was 1.3%, lower than initially estimated, and inflation remains above the Fed’s target of 2%. Retail sales were flat in April, with consumer sentiment showing a slow improvement since May 2023. Gas prices have fallen recently, which may impact consumer spending positively. Mortgage rates are high compared to the 10-year median and may stay elevated, affecting home sales.
Higher mortgage rates have led to a decline in existing home sales, with prices continuing to rise due to limited inventory. Despite these economic indicators, the stock market has remained strong, with the S&P 500 rising almost 50% since October 2022, driven by job growth and lower inflation. Overall, the data suggests a mixed economic outlook, with some indicators pointing to potential challenges while others indicate resilience and optimism in the market.
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