September 2024

Truist Economic Roundup

Keep up with the latest economic data and headlines from Truist.

Our take

U.S. economy is cooling but not weak

Economic data continue to reflect a U.S. economy that is cooling but not weak. However, it’s becoming more apparent that interest rates are overly restrictive to the point of hampering growth. The Federal Reserve is on track for a quarter point (0.25%) rate cut in September.

Choose from the tabs below to get the details on economic trends.

Positive

GDP: Gross domestic product was revised upward from 2.8% to 3.0% for Q2 2024. The big contributors were consumer spending and business inventories, while net exports and residential building dragged.Disclosure 1

Jobs: U.S. payrolls added 145,000 jobs in August, missing the consensus expectations of 165,000. The prior two months were revised downward by 86,000 jobs combined, lowering the six-month average to 174,000. The unemployment rate dropped by 0.2 percentage points to a five-month low.Disclosure 2

Wages: U.S. personal income rose by 0.3% in July, beating expectations of a 0.2% increase. Incomes are up 4.5% year-over-year.Disclosure 3

Services: The reading for the ISM Services index rose slightly to 51.5 in August, the first back-to-back gains in seven months.Disclosure 4

Apartment rental prices: Rent index rose 0.2% month-over-month in July, up 3.5% from a year ago, below the pre-pandemic five-year average of 4.3%.Disclosure 5

New-vehicle affordability: New-vehicle affordability improved in July to the highest level in three years as incentives grew and rates drifted lower. The number of median weeks of income needed to purchase the average new vehicle declined to 37.0 weeks from an upwardly-revised 37.6 weeks in June.Disclosure 6

Negative

Federal funds rate: The Federal Reserve held rates again in July, but Chairman Powell teed up a rate cut in September. Markets are now expecting almost a half-point rate cut.Disclosure 7

Housing: Existing home sales rose 1.0% in July, but single family sales declined in 26 of the past 30 months.Disclosure 8 New home sales rose 10.6% month-over-month in July, swinging to a 14-month high. New housing starts dropped 6.8% month-over-month as single-family starts fell for a fifth straight month. New building permits fell 4.0% in July as multi-family permits dropped by 12.4%.Disclosure 9

Manufacturing: Manufacturing activity contracted for the fifth consecutive month in August. It has only expanded once in the last 22 months, dating back to October 2022.Disclosure 4

Stock and bond markets: The first week of September saw the biggest weekly drop in the S&P 500 and Dow since March 2023.Disclosure 10 10-year Treasury yields moved above short-term yields for the first time since June 2022, reversing the inverted yield curve. Analysts are split on what this change could portend for the economy.Disclosure 11 Markets are likely to remain volatile until the Fed’s anticipated rate cut in September.

Neutral

30-year fixed mortgage rate: Mortgage rates dropped to their lowest rate since May 2023 helping home affordability.Disclosure 12

Inflation: Consumer prices rose by 0.2% in July, in line with expectations. Producer prices were up 0.1% in July, cooler than expected despite a rebound in energy.Disclosure 2

Consumer sentiment: The Index of Consumer Sentiment rose to 67.9 in August from 66.4 in July, snapping an eight-month slide. One-year inflation expectations held steady at 2.9%, and long-term remained at 3.0% for a fifth straight month.Disclosure 13

Business inventories: U.S. business inventories increased by 0.3% in June, marking the third straight month of increases.Disclosure 9

Back to office: As of September 6, office occupancy rose to 48.5 from 47.2 in the prior week (pre-pandemic indexed to 100).Disclosure 14

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Disclosure 1 U.S. Bureau of Economic Analysis.

Disclosure 2 U.S. Bureau of Labor Statistics.

Disclosure 3 U.S. Bureau of Economic Analysis.

Disclosure 4 Institute for Supply Management (ISM).

Disclosure 5 Zillow

Disclosure 6 The Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

Disclosure 7 Federal Reserve Bank of New York.

Disclosure 8 National Association of REALTORS®.

Disclosure 9 U.S. Census Bureau.

Disclosure 10 S&P Global.

Disclosure 11 U.S. Department of the Treasury.

Disclosure 12 Truist Bank.

Disclosure 13 University of Michigan Consumer Sentiment Index.

Disclosure 14 Kastle Systems.

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