Link controls uniqueness—cooling inflation limits recession risks
Peterson 24 (Dana M. Peterson, Chief Economist and Leader of the Economy, Strategy & Finance Center at The Conference Board. “Retail Sales Confirm Continued Consumer Spending Pullback” 6/18/2024. Accessed 6/19/2024. https://www.conference-board.org/brief/global-economy/retail-sales-analysis-may-2024) wtk
Weaker consumer spending is all according to the Fed’s plan: cool economic activity and thereby inflation, hopefully without inducing a recession. We believe Q2 and Q3 real GDP growth will be anemic (between 0% and 1% q/q annualized). Still a recession is unlikely because businesses are still generally willing to hold on to their best talent.
Against this backdrop, we anticipate that slower real GDP growth and inflation, plus a relatively healthy labor market will enable the Fed to cut interest rates twice this year – potentially at the November and December meetings. Indeed, only a slight majority of FOMC participants desired one cut at the June meeting, with others mostly anticipating two cuts.