Continued employment growth, while
slowing, together with disposable income growth is supporting consumer spending.
Unemployment remains low, labor force participation rates are rising, and labor
markets are still getting tighter. Weakness in the manufacturing sector has not
yet spilled over to the rest of the economy. The Federal Reserve is expected to
cut interest rates in September due to slowing global growth, trade policy
volatility, and below target inflation rates. Trade disputes and other
geopolitical tensions are increasing the risk of a sharper slowdown, but our
baseline scenario avoids a recession.