The US economy appears to have avoided a recession, according to National Retail Federation (NRF) Chief Economist Jack Kleinhenz, as it slows but continues to grow and inflation falls as the Federal Reserve prepares to decrease interest rates.
“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,” according to Kleinhenz. “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 a “eventful August” with initial reports of growing unemployment and a manufacturing slowdown, 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 were in the September issue of the NRF‘s Monthly Economic Review, which stated that annualised GDP growth for the second quarter had been revised up to 3% from the previous estimate of 2.8%. Consumer expenditure, the main component of GDP, was revised up to 2.9% growth in the quarter from 2.3%. Spending has slowed this year after surging in the second half of 2023, but “the American consumer has been resilient.”
The year-over-year increase rate in the Personal Consumption Expenditures Price Index, the Fed’s preferred measure of inflation, was 2.5% in July, unchanged from June and only half a percentage point above the Fed’s 2% target.