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U.S. Economic and Market Highlights

THE ECONOMY

·       Resilient U.S. consumer demand is putting disinflation progress at risk, raising the need for either additional interest rate hikes, or a sustained period of high interest rates. Hawkish narrative from the Federal Reserve contributed to an increase in the long-term U.S. Treasury Bond rate and a selloff in the equity and bond markets in September. (See Market Tracker below.)

U.S. Economic and Market Highlights

THE ECONOMY

• The U.S. economy showcased robust growth, surpassing Q2 expectations despite eleven Federal Reserve rate increases since early last year to 5.5%, the highest level in 22 years. With a GDP rate of 2.4%, expansion was fueled by strong consumer spending and a low, steady unemployment rate of 3.6%, which is the same as it was early last year when rate increases began.

U.S. Economic and Market Highlights

THE ECONOMY

• The economy looks strong, and in the second quarter, the consensus expects real GDP to grow around 2% in the U.S. Consumption in the first quarter was the strongest since early 2021, powered by the labor market and fading inflation. Food and energy price inflation had hit households particularly hard.