Economy Watch: US View (June 2024)

The US economy started 2024 on a softer note than anticipated as elevated inflation and interest rates continued to weigh on growth. While we do not forecast a recession in 2024, we do expect consumer spending growth to cool further and for overall GDP growth to slow to under 1 per cent over the Q2 to Q3 2024 period. Following stalled progress on inflation in Q1 2024, April amd May data show renewed relief. However, we do not expect the Fed’s 2 per cent target to be achieved until Q2 2025. Interest rates should fall starting in late 2024 but may ultimately stabilize at levels exceeding pre-pandemic averages.