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The U.S. economy has presented a set of data that brings a semblance of relief to the Federal Reserve, amid its ongoing battle against inflation and economic downturns. The third-quarter gross domestic product (GDP) growth rate and inflation figures, both key indicators of economic health, were revised to show slower growth and inflation than initially reported. This new data, suggesting a potential for a “soft landing,” supports the Federal Reserve’s inclination towards interest rate cuts in 2024, a move that would mark a significant shift in its current monetary policy. According to the final report released by the Commerce Department, the U.S. GDP grew at an annualized rate of 4.9% from July to September, a slight decrease from the earlier estimate of 5.2%. This adjustment aligns with the department’s initial calculation, deviating from the expectations of economists who predicted the GDP rate to remain steady. Additionally, the core personal consumption expenditures price index, a measure closely monitored by the Federal Reserve, rose by 2% last quarter, which is lower than the 2.3% forecast by economists. Economic Indicators Align with Federal Reserve’s Goals This latest economic data is seen as reinforcing Federal Reserve Chair Jerome Powell’s recent pivot toward easing monetary policy. Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, described the data as “an impressive print” consistent with the Fed’s target. The Federal Reserve, which has been facing the daunting task of curbing inflation without triggering a recession, may find these figures to be a conducive environment for implementing rate cuts next year. The report on the GDP and inflation numbers arrived alongside other encouraging economic indicators. The Labor Department’s recent data showed a marginal rise in new claims for unemployment benefits last week, suggesting that the economy is regaining some momentum as the year concludes. Other…

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Filed under: News - @ December 21, 2023 8:16 pm