WisdomTree – Economic Market Outlook, July 2024

As we enter the second half of 2024, the focus on the possibility of a recession has diminished in the market. Despite previous concerns about a potential negative GDP quarter due to an inverted Treasury yield curve, the economy has shown resilience, supported by a solid labor market. While there are some signs of a slowdown in activity, overall data does not suggest any significant weakness. Looking ahead, factors such as consumer spending, private domestic investment, trade, inventories, and government outlays will influence economic growth. Inflation, which started higher than expected, has since shown some moderation, raising questions about future trends. The Federal Reserve's goal of 2% inflation may be harder to achieve than initially thought. The market and the Fed's projections regarding rate cuts have come closer to alignment, with expectations shifting towards two rate cuts in contrast to the Fed's prediction of one. Overall, the economic outlook for the U.S. suggests modest growth and a continued focus on disinflation.