The U.S. Conference Board Consumer Confidence Index rose to 100.3 in July 2024, up from a revised 97.8 in June. This growth was mainly driven by improved consumer expectations regarding future economic conditions, even as views on the present situation slightly weakened. The Present Situation Index, which gauges current business and labor conditions, declined to 133.6 from 135.3, reflecting concerns over job availability and the continued impact of high prices. The upcoming August data is expected to show minimal changes, as stabilizing inflation expectations are balanced by persistent worries about high interest rates and economic uncertainty, keeping consumer confidence within a tight range.
For Q2 2024, the U.S. GDP grew at an annualized rate of 2.8% in a preliminary reading, a notable increase from the 1.4% growth in Q1 2024. This growth exceeded market expectations of 2.1%, driven by stronger consumer spending, business investments, and government spending. Consumer spending increased by 2.3%, while non-residential business investment rose by 5.2%, reflecting resilience in the economy despite high interest rates. Government spending also contributed with a 3.1% growth rate. The strong Q2 performance suggests that the economy is holding up well, but this momentum might not be sustained. Factors like the slowing housing market, a modest rise in the unemployment rate, and decelerating wage growth could moderate future GDP growth. The upcoming data release is expected to revise lower due to potential cooling in consumer spending and investment activities as interest rates continue to bite.
The Eurozone’s annual Consumer Price Index (CPI) rose to 2.6% in July 2024, up from 2.5% in June. This slight increase was driven mainly by a jump in energy prices, which rose by 1.3% compared to 0.2% in the previous month. This uptick in inflation remains consistent with ongoing cost pressures in essential sectors despite easing in other areas. For the next release, inflation is expected to remain relatively stable, with potential risks leaning towards further increases if energy costs or core service prices pick up further. Inflation is expected to stay above the European Central Bank’s (ECB) 2% target, primarily due to persistent pressures in services and energy. The ECB’s projections see inflation hovering around 2.5% for 2024, with a gradual decline towards 2.1% by 2025.
The US Core PCE which is closely watched by the Fed as a key inflation gauge, remained steady at 2.6% year-over-year for June 2024, matching the previous month and slightly above the forecast of 2.5%. This stability indicates that while inflation pressures persist, they are not accelerating, suggesting the Federal Reserve’s efforts to control inflation are having a sustained impact. Given current conditions, a slight decline or stabilization near 2.5% seems likely for the next release. This would support market expectations that the Fed is nearing the end of its tightening cycle.
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