Economic Data Tracker – 
Jobs and the Fed and you 

Economic Data Tracker

May 3, 2024

Our weekly view on the economy including rationale on GDP, jobs report, and Fed policy decisions.

Trend watch

Freight appears to be climbing out of its monthslong hole. Global air cargo rose 8% YoY in April. Rail traffic (carloads and intermodal units) is up 2.2% YoY through April. Container traffic at 7 top U.S. ports (LA, LB, NY/NJ, SAV, SEATAC, HOU, CHS) rose 0.4% in March and has jumped 15.5% year-to-date compared to the first quarter of 2023. We’re still awaiting April trucking data; truck tonnage in the three months of 2024 fell 0.8% compared to the fourth quarter of 2023 and declined 2.4% from the first quarter of 2023.

Most of the activity-based indicators (slides 5 and 6) ebbed slightly on a week-to-week basis. 

What’s new this week

  • April job growth solid, albeit cooler (slide 7).
  • Most labor metrics cooler than 2023, but not weak (slide 8).
  • Wages cooling from their peak, remain well-above pre-pandemic pace (slide 9).
  • Purchasing managers index (PMI): Mixed view, certainly NOT reaccelerating (slide 10).
  • ·ob openings and hiring dip in March, while quit rate back at prior trend (slide 11).
  • Small businesses are favorable towards their own business conditions but are less optimistic over larger economic trends (slide 12).

Our take

Charles Dickens wrote that, “It was the best of times, it was the worst of times.” It seems like not much as changed from 165 years ago. Markets have lurched from exuberance to panic and back to exuberance in the span of four weeks.

Similarly, the expectations for when and how much the Federal Reserve (Fed) might cut interest rates has shifted dramatically in the past month. A month ago, markets expected at least two quarter-point (0.25%) rate cuts starting likely in July; now cuts are expected to start perhaps in September or November, and there is a growing chorus saying no cut in 2024.

The April jobs report pushed around markets and Fed rate cut expectations again. The economy remains solid. As such, the labor market remains undeniably resilient.

Case in point: April’s job growth of 175,000 was the “weakest” in six months, but roughly in-line with the pre-pandemic 3-year average. In other words, April’s job growth wasn’t weak.  

Thus, it’s important not to confuse gradual cooling and normalization with weakness and recession. Indeed, when viewing the labor metrics on a year-over-year basis, most appear cooler but certainly not weak.

In our view, the gradual cooling of the job metrics report validates the Fed’s mantra of patience, keeping them in a holding pattern for a while longer. We still wouldn’t rule out the Fed reducing rates this summer, though it very well could be September.

Of course, the decision is also based on more than simply the jobs report. From a practical standpoint, there isn’t much difference between July versus September, especially if markets front-run the Fed based on economic data and price-in a rate cut ahead of the actual cut. As the famous song says, “all we need is just a little patience.”

Lastly, we believe there’s a fairly wide perception gap. On slide 12, we show some of the results of the 2024 Truist Small Business Pulse survey, which was conducted during February. Within it, we were struck by how many small businesses are favorable towards their own business conditions but are less optimistic about larger economic trends.

Several recent polls have shown similar results for consumers more broadly. Ultimately, there appears to be a mismatch between how consumers and small businesses view their own circumstances and that of the U.S. economy.

While we can speculate whether the causes are inflation fatigue, or the recession drumbeat, or politics – it isn’t entirely clear why there is such a disconnect. Perhaps it’s all of it. 

Bottom line

The U.S. economy remains resilient and should sidestep a recession. Most economic data continues to steadily improve. Yet, the cumulative impact of higher rates does weigh on economic growth. We maintain our view that the Fed will reduce rates in the summer. 

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