US GDP Growth Slows But Indicates Potential Soft Landing

According to Blockworks, the gross domestic product (GDP) for the third quarter of 2024 showed a slight decline from expectations, but the growth rate still suggests a potential soft landing for the economy. The GDP rose at an annualized pace of 2.8%, just below the anticipated 3%. This growth was driven by strong consumer and government spending, with personal consumption increasing to 3.7%, marking the strongest quarter since early 2023. The quarterly personal consumption expenditures (PCE) index increased by 1.5% annually, compared to 2.5% in the second quarter. The monthly PCE index for September is expected to be released tomorrow. The Atlanta Fed’s GDPNow model had adjusted its third-quarter estimate from 3.3% to 2.8% earlier this week. Kathy Jones, chief fixed income strategist at Charles Schwab, referred to the latest figures as “soft landing numbers.” James Bullard, former president of the St. Louis Fed, suggested earlier this month that a soft landing might already be in place. However, upcoming data, including tomorrow’s PCE numbers and Friday’s US employment report, will provide further insights. The recent Job Openings and Labor Turnover Survey (JOLTS) report indicated that US job openings in September fell to their lowest level since early 2021, with available positions declining to 7.44 million from 7.89 million in August, missing economists’ expectations of 8 million. Tom Essaye, founder of Sevens Report Research, noted that while the JOLTS report alone might not derail the soft landing thesis, it does suggest a need for a slowdown in the decline of job openings to maintain a healthy labor market. The September jobs report will be crucial in this context. Market expectations remain high, with a 96% certainty that the Federal Reserve will implement another 25-basis point interest rate cut next month, according to CME Group data.