The US economy has for quite some time now has looked like the Energizer bunny
The US economy has for quite some time now has looked like the Energizer bunny — an iconic battery-powered rabbit in 1980s advertising that kept going and going, banging on a drum. But if you look closely, the bunny is now slowing down.
Monthly payroll gains averaged 222,000 in the first half of the year, down from 289,000 in the same period a year before. The unemployment rate has climbed (though remains historically low, at 4.1%).
The housing market has slowed under the weight of mortgage rates that continue to linger near 7%, well above the average of around 4% over the decade before the pandemic.
The Federal Reserve's latest Beige Book report showed almost half of the 12 Fed districts cited flat or declining activity.
Figures due out Thursday are expected to show the economy grew at a 2% annualized pace last quarter. After the 1.4% of the year's first quarter, that would be the weakest back-to-back pace since the first half of 2022.
The good thing is, more than two years since the Fed began its most aggressive monetary tightening cycle since the 1980s, the bottom is hardly falling out of the economy. Retail spending has slowed but not collapsed, and the job market continues to grow, along with real wages.
Some liken the current moment to the mid-1990s, when the Fed managed to nail a soft landing, despite traditional harbingers of a recession such as a contraction in the money supply and persistently weak readings on manufacturing orders.
"I don't know that we have a half-decade of expansion to go," Morgan Stanley's chief global economist Seth Carpenter wrote in a recent note. "But for now, we need to see other indicators to change our minds."
The slowdown adds to expectations for the Fed to begin lowering rates, with the July 30-31 meeting expected by many to set up a September start to an easing cycle.
San Francisco Fed President Mary Daly said in an interview earlier this month: "We don't want to be to a point where we start to see the labor market weaken substantially to falter because by then, it is actually often too late to bring it back."
Monthly payroll gains averaged 222,000 in the first half of the year, down from 289,000 in the same period a year before. The unemployment rate has climbed (though remains historically low, at 4.1%).
The housing market has slowed under the weight of mortgage rates that continue to linger near 7%, well above the average of around 4% over the decade before the pandemic.
The Federal Reserve's latest Beige Book report showed almost half of the 12 Fed districts cited flat or declining activity.
Figures due out Thursday are expected to show the economy grew at a 2% annualized pace last quarter. After the 1.4% of the year's first quarter, that would be the weakest back-to-back pace since the first half of 2022.
The Energizer Holdings Inc. Energizer Bunny mascot. Photographer: David Williams/Bloomberg
The good thing is, more than two years since the Fed began its most aggressive monetary tightening cycle since the 1980s, the bottom is hardly falling out of the economy. Retail spending has slowed but not collapsed, and the job market continues to grow, along with real wages.
Some liken the current moment to the mid-1990s, when the Fed managed to nail a soft landing, despite traditional harbingers of a recession such as a contraction in the money supply and persistently weak readings on manufacturing orders.
"I don't know that we have a half-decade of expansion to go," Morgan Stanley's chief global economist Seth Carpenter wrote in a recent note. "But for now, we need to see other indicators to change our minds."
The slowdown adds to expectations for the Fed to begin lowering rates, with the July 30-31 meeting expected by many to set up a September start to an easing cycle.
San Francisco Fed President Mary Daly said in an interview earlier this month: "We don't want to be to a point where we start to see the labor market weaken substantially to falter because by then, it is actually often too late to bring it back."
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