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Of course, the high cost of living remains a major concern for Americans.

Although the rate of inflation has slowed sharply from 9% in June 2022, there is a painful snowballing effect from more than two years of sharp price gains. Americans are paying much more for groceries, rent and insurance than before Covid-19.

The U.S. economy is on relatively solid footing heading into the second half of 2024. But while inflation has cooled, progress has been choppy and inconsistent. Labor markets have remained stable, but the Federal Reserve has been forced to delay its pivot to interest rate cuts. Many economists, including Federal Open Market Committee (FOMC) members, anticipate a soft landing for the U.S. economy in 2024 that includes slowing GDP growth but no recession. However, a single misstep in Fed policy could easily slow the economy so much that it contracts into a recession, making the next several months a critical period for the central bank. Economic recessions are no reason for panic and have been a regular occurrence over the past century. However, investors can make the most of a difficult situation by knowing which risk factors to watch and how to position their portfolios to optimize their performance if a recession is looming in 2024 or 2025.

The big question right now is whether the economy's gentle slowdown could morph into a painful downturn. But the signals that typically offer clues look more unreliable than ever. Why it matters: Recession indicators don't work like they used to. Many of them have been tripped, yet no big downturn has materialized. The quirks of the pandemic business cycle — driven by a rolling series of disruptions to supply and demand — are the likely culprit. Flashback: In the past, trends in temporary employment were a big tell — whatever happened in this sector soon happened in the broader job market. Or at least, that was the case ahead of recessions in 1991, 2001 and 2008. Declines in temp employment "preceded those in the overall labor market by 6 to 12 months" in the recessions before 2020, the Bureau of Labor Statistics found. The intuition is straightforward: Companies cut back on temp employees to forestall layoffs of permanent workers. Temp employment peaked in March 2022; it has shed 515,000 jobs since then, a 16% drop. But total payroll employment has kept rising anyway. "The decline has been going on for way too long for me to say there's a direct linkage" to the rest of the economy, Ger Doyle, an executive at staffing agency Manpower, tells Axios.

UBS analysts reiterate their confidence in a soft landing for the US economy, with inflation on a downward trend and the Federal Reserve poised to cut rates.

"We maintain our view that the US economy is headed for a soft landing," states UBS. They point to moderating consumer spending as a key factor in bringing down inflation.

The US economy is on the verge of an extremely rare achievement.

Economic growth in the first half of the year was solid, with the economy expanding a robust 2.8% annualized rate in the second quarter, according to fresh Commerce Department figures released Thursday, which are adjusted for inflation and seasonal swings.

The US economy is cooling off. Inflation is slowing and job openings are rising. Consumers are spending less and borrowing more. While those dynamics might seem worrying at first glance, analysts say they’re signals the economy is moving in the right direction. Analysts say the combination of falling inflation and a loosening labour market bolsters the Federal Reserve’s confidence for an interest rate cut this year. That would end one of the most aggressive policy-tightening cycles in recent history. Lower rates make borrowing cheaper and tend to be a tailwind for both stocks and consumers.

That tightening cycle helped control inflation and brought supply and demand into better balance after the upheaval of the past few years. The question now is whether the economy can coast to a soft landing or if today’s sustainable slowdown will become tomorrow’s recession.

For more than two years, inflation has eclipsed everything else at the Federal Reserve. In a shift eagerly awaited by global markets, that’s poised to change.

US central bankers are ready to cut interest rates in September amid growing confidence that price stability is within sight – while risks to the labor market have grown. They’ve laid the groundwork for the coming move in speeches over recent weeks, and Chair Jerome Powell will likely flag it more explicitly after a policy meeting on July 30-31.

The Consumer Price Index climbed at a moderate pace in June compared with a year earlier and fell on a monthly basis, welcome news for Federal Reserve officials who are watching for further evidence that they have wrestled rapid inflation under control. Overall inflation was 3 percent in June on a yearly basis, down from 3.3 percent in May, and softer than the 3.1 percent that economists had forecast in a Bloomberg survey. After stripping out food and fuel prices for a sense of the underlying trend, the “core” price index climbed 3.3 percent compared to year earlier, down from the previous report. And compared to the previous month, prices dropped 0.1 percent, while the core index ticked up only slightly. In all, the very cool inflation data provided clear evidence that inflation is slowing meaningfully, exactly the kind of progress that Fed officials have been hoping to see as they contemplate when to begin cutting interest rates. The central bank has held borrowing costs at 5.3 percent for the past year, a relatively high setting that is meant to cool the economy by weighing down demand for big purchases that require loans, like houses and cars. While policymakers came into 2024 expecting to cut them several times, a spate of stubborn inflation numbers early in the year have kept them on hold. But now, evidence is mounting that inflation is truly coming under control, which could pave the way for a rate cut in the coming months. “This is the inflation report that we’ve been waiting for,” said Neil Dutta, head of economic research at Renaissance Macro. “The important story for the Fed is that this is happening at a time when the unemployment rate has been going up for the last three months, and the trade-offs are shifting.”

The current U.S. inflation rate is 3.0% for the 12-month period leading up to June 2024. The consumer price index (CPI), which measures changes in prices, fell 0.1% in June after remaining the same in May, according to the latest release from the Bureau of Labor Statistics [1] . The BLS notes that the declines in gasoline and energy prices offset a rise in the shelter index. The next monthly update will be released on Wednesday, August 14, 2024. A 3.0% inflation rate may not seem like a lot, or as much as the price changes you've noticed at the grocery store. But to put inflation in context over the last few years, consumer price inflation rose 21.78% between January 2020 and June 2024, and stubbornly high housing costs persist.

But the US economy has defied those pessimistic predictions. Inflation fell from 6.5% in 2022 to 3.7% in 2023, despite economic growth accelerating. We project inflation to continue to fall, averaging 2.4% in 2024 and then averaging just 1.8% over 2025 to 2028.

In terms of the exact timing, we expect core PCE to hit 2.0% year over year sometime in the first quarter of 2025.

With a similar caveat regarding one month of data, the easing of housing costs in June is a welcome development. We know that rental inflation, particularly for new , has eased in recent months, and that it takes numerous months for this slower inflation to show up in the CPI. CEA’s housing model (see the link to our X thread above) is designed to capture these lag dynamics, and in June its forecast downshifted a bit. This suggests future prints could continue the improvement we saw in June. To summarize, inflation, and even prices themselves (i.e., the price level vs. the growth rate), fell in a number of consumer-salient categories in June leading the overall index to contract slightly. Housing inflation eased a bit in June, gas and car prices fell, and monthly grocery inflation has averaged zero so far this year. At the same time, the persistently strong US labor market has been generating a pace of wage growth that’s been handily and repeatedly beating price growth. For each of the last 16 months, for example, hourly wages for middle-wage workers have outpaced inflation on a yearly basis, including by 1% in June.

The U.S. economy grew faster than expected in the second quarter amid solid gains in consumer spending and business investment, but inflation pressures subsided, leaving intact expectations of a September interest rate cut from the Federal Reserve.

Growth last quarter also received a boost from inventory building as well as increased government spending, the Commerce Department's advance report on second-quarter gross domestic product on Thursday showed. The housing market recovery, however, regressed and was a small drag on the economy. The trade deficit widened further, subtracting from GDP growth.

America’s central bank doesn’t see any signs of a recession on the horizon. Not this year nor the year after. The Federal Reserve’s policymaking committee of 19 officials released a new set of economic projections last week, showing that they now expect economic growth in 2024, 2025 and 2026 to be even stronger than they previously thought. That optimism seems to be the consensus among analysts, including Goldman Sachs’ chief economist: The ruthless economic pains of a recession, such as mass layoffs and tepid consumer spending, probably won’t happen anytime soon. “The economy is strong, the labor market is strong and inflation has come way down,” Fed Chair Jerome Powell said Wednesday. Corporate earnings have been robust, the stock market continues to break record after record and America might be in the thick of a productivity boom that could boost growth without stoking inflation. And even though interest rates are at their highest levels in two decades, the economy continues to display remarkable resilience. Economists say that strength could persist through the coming years.

The U.S. economy accelerated in the second quarter as consumers increased their spending, businesses invested more in equipment and stocked inventories, and inflation cooled.

Gross domestic product—the value of all goods and services produced in the U.S., adjusted for inflation and seasonality—rose at an annual rate of 2.8% for April through June to $22.9 trillion, the Commerce Department said Thursday.

The US economy continues to show signs of resilient growth while inflation pressures subside. Business activity grew at its fastest pace in 27 months during July, according to the latest S&P Global flash US composite PMI. The composite PMI, which captures activity in both the services and manufacturing sectors, came in at 55 in July, up from 54.8 in June. Economists had expected the index to tick lower to 54.2. Importantly, the surprise growth in activity came alongside lower price increases. Average prices charged for goods and services rose at the slowest rate since January and the second-slowest rate since October 2020, according to S&P Global's report. “The flash PMI data signal a ‘Goldilocks’ scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates," Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the release. Wednesday's release is the latest in a string of data points that have investors increasingly confident the Federal Reserve will cut interest rates before a deterioration in the US economy, keeping the vaunted "soft landing" outcome to the Fed's hiking cycle in sight. As of Wednesday morning, investors were pricing in a 100% chance the Fed cuts rates in September, per the CME FedWatch tool. Services drove the gains in the composite index, with the index rising to a reading of 56, its highest in 28 months. Meanwhile, activity in the manufacturing sector declined, hitting a reading of 49.5, its lowest print in seven months. Any reading above 50 for these indexes represents expansion in the sector; readings below 50 indicate contraction. "Growth has become worryingly skewed, with manufacturing slipping back into contraction as the service sector gains further strength," Williamson said. "Some of the production decline was linked to staff shortages, so could prove temporary — something which is supported by the sector reporting improved confidence about future growth prospects." Broadly, Williamson reasons that the metrics are still strong enough to translate to solid economic growth in the third quarter. Willamson noted that output across manufacturing and services is expanding at "the strongest rate for over two years in July." This points to the economy growing at a 2.5% annualized rate in the third quarter, Williamson noted. The first reading of second quarter Gross Domestic Product (GDP) is expected on Thursday morning. Economists project the US economy grew at an annualized rate of 2% in the second quarter.

The Congressional Budget Office estimated that this restriction would reduce funding for SNAP by almost $30 billion over the next ten years.

On May 20, the Urban Institute released a report stating that SNAP benefits already “did not cover the cost of a modestly priced meal in at least 98 percent of counties” in 2023. Without the last revision to the Thrifty Food Plan in 2021, according to another report from the Center on Budget and Policy Priorities, SNAP benefits in 2024 would have been only $4.80 per person per day instead of the current rate of $6.20 per person per day.

In a country where millions of people struggle with food insecurity and significant racial inequities in food hardship persist, the farm bill’s top priority should be protecting and strengthening SNAP.

Last week, House Agriculture Committee Chair Glenn “GT” Thompson released the text of his farm bill proposal. In a country where millions of people struggle with food insecurity and significant racial inequities in food hardship persist, the farm bill’s top priority should be protecting and strengthening the Supplemental Nutrition Assistance Program (SNAP), our nation’s most important anti-hunger program. This proposal fails to do so and should be rejected.

A farm bill debate in Congress might conjure up visions of rustic barns and amber waves of grain. So it may surprise you to learn that this legislation could expose kids to pesticides, cut funding for hungry Americans and worsen the climate crisis.

Some parts of the farm bill do address agriculture directly, including billions of dollars in bloated farm subsidies funded by taxpayers that go to a handful of farmers – even when total farm incomes reach new heights.

There’s much to dislike about the House Republican farm bill – like taking food out of hungry childrens’ mouths while potentially exposing their bodies to more pesticides and supporting companies that use child labor.

How would the House farm bill do this?

Rep. Glenn Thompson wants to pass the new Farm Bill quickly to offset falling farm income, but that may not be rapid enough for cash-strapped farmers.

“We stand ready to provide them what they need,” Thompson, the House Agriculture Committee chairman from Pennsylvania, said in a July 23 hearing.