According to Santander Research, economic data and inflation rates slowed down in April compared to the previous quarters. Payrolls were at 175k and consumption growth decreased from +3% in the first quarter to +2% in the first quarter of 2024. The nominal growth rate was only +0.2% and negative in real terms at -0.1%.
As a result of these findings, economists have revised their estimates for nominal consumption and real GDP in the second quarter of 2024 to 2%, down from the previous estimate of 2.5%. They also predict that real consumption will be only 1% in the second half of 2024. Despite meeting the Federal Reserve’s goal of achieving a landing, progress in inflation remains challenging.
The core PCE deflator figure showed a slight increase of +0.2% in April, just short of an annualized advance of 3%. Economists see this as a small step towards reducing inflation, but not enough to be decisive. Kashkari’s comments suggest that maintaining unchanged rates for an extended period may be necessary to preserve the prosperity of the US economy.
In conclusion, Santander Research reported slowing economic data and inflation rates for April following a strong first quarter. Payrolls decreased by 175k, while consumption growth dropped from +3% to +2%. Nominal growth was only +0.2%, and real growth was -0.1%. Despite meeting the Federal Reserve’s goal, progress towards reducing inflation remains challenging due to weak economic data and slowdown in payrolls and consumption growth.
Economists have adjusted their estimates for nominal consumption and real GDP for the second quarter of 2024 down by 0.5%, reflecting weaker economic conditions than previously expected. Real consumption is predicted to be only 1% in the second half of 2024, indicating that consumers are not spending as much as expected due to higher prices and uncertain job prospects.
Kashkari has suggested that maintaining unchanged rates for an extended period may be necessary to avoid jeopardizing US economy’s prosperity due to weakening economic conditions and high inflation rates.
Therefore, it is clear that despite meeting some objectives set by Federal Reserve such as achieving a landing on inflation target rate , American economy still faces several challenges including slowdown payrolls , low consumer spending , high prices , job uncertainty which affects overall health of US economy .
