First cracks appearing in US consumption

Macroeconomic update for June 2024  

All eyes have been on the world’s largest economy, with investors eagerly dissecting data points and searching for clues when the US Federal Reserve might start cutting interest rates. The recession many anticipated last year hasn’t materialized yet amid a strong labor market and resilient consumers. What does the current picture tell us? We see the first cracks starting to appear in US consumption.  

Key Takeaways

1. Is the US economy cooling down?  
   While having proven its resilience over the past year, the US economy started the year on a softer footing and the services industry has weakened.  
2. Can US consumers stay strong?   
   A mix of real personal income growth having peaked with lower wage pressure and sticky inflation, tight lending conditions, and high interest rates present headwinds.   
3. And what does this mean for monetary policy?  
   The Fed will likely cut rates later than originally anticipated. Some of its counterparts around the world have decided to push ahead with lowering rates ahead of the Fed.  

Even the smallest undertaking starts with a conversation