Page 27 - The EDGE Winter 2024 WEB

ECONOMIC DATA

BY TOM PALMER
Thoughts on Interest Rates and Growth

Tom Palmer

“Inflation is still too high, and a few months what gives? One answer can be found in the
of good data are only the beginning of what it continued strength of U.S. jobs data, which
will take to build confidence that inflation is saw nonfarm payrolls increase by 336,000
moving down sustainably toward our goal. We for the month of September (compared to the
cannot yet know how long these lower readings Dow Jones consensus estimate of 170,000).
will persist, or where inflation will settle over In addition, the 2023 monthly unemployment
coming quarters. While the path is likely to be rates, ranging from 3.4% to 3.8%, are among
bumpy and take some time, my colleagues and the lowest since 1969.
I are united in our commitment to bringing
inflation down sustainably to 2 percent.” ~ Strong job and consumer data have combined
Jerome Powell, Fed Chair, during a discussion to keep U.S. GDP at levels much higher than
at the Economic Club of New York. 10/19/23 Wall Street pundits had forecast coming into
2023, when many economists were calling
“We play dumb, but we know exactly what we're for a recession. As recently as August 15 of
doing.” ~ Taylor Swift, from her album, 1989 this year, the consensus estimate for U.S.
GDP growth in Q3 2023 was 0.5%. Much
As the calendar turns to the fourth quarter of to the surprise of many economists, the real
2023, the stock and bond markets continue to gross domestic product (GDP) increased
focus on the themes of: at an annual rate of a whopping 4.9%. The
• inflation strength in Q3 GDP, according to the Bureau
• a highly resilient consumer of Economic Analysis, was due to increases
• interest rates at multi-decade highs in consumer spending; private inventory
• a strong employment and economic investment; exports; government spending
backdrop (state, local and federal); and residential fixed
• the odds of a soft or hard landing investment.
• the Fed's next rate move
With this surprisingly strong economic
Beginning with consumer resiliency, data now in the rearview mirror, investors
consumers seem to know exactly what are looking ahead to the end of 2023
they're doing: spending up a storm on things and early 2024 for clues on whether this
such as travel, dining out, and Taylor Swift strength is sustainable. Some insight from a
tickets. This robust spending coincides with deeply seasoned, highly successful market
rates on mortgages and auto loans that are participant can be helpful in this endeavor.
at the highest levels in over 20 years. So In his December 2022 memo entitled, “Sea

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