Economic Data Tracker – 
1Q24 growth revised lower amidst more signs of cooler inflation

Trend watch

Travel activity dipped after Memorial Day week that included a record-setting 2.95 million last Friday, May 24^th, which was the most in a single day ever, surpassing 2.91 million on the Sunday after Thanksgiving in 2023.

A drop in the week following Memorial Day is the typical pattern, but a record high occurring outside of Thanksgiving week or during the summer is unusual. It indicates a strong likelihood for robust summer travel.

Most of the activity-based indicators (slides 5 and 6) were also impacted on a week-to-week basis by the holiday with some up (rail traffic and hotel occupancy) and some down (staffing and back to office). 

What’s new this week

• 1Q24 growth revised modestly downward (slide 7).
• The Fed’s favorite inflation gauge’s pace steady as housing slowly cools (slide 8).
• Big 4 indicators point toward continued growth for U.S. economy (slide 9). Updated following the release of the personal income and spending figures.
• Port traffic shows strength, not weakness (slide 10).
• Select automakers and EVs boosting overall retail inventories (slide 11). 

Our take

Several more data points indicate that overall economic growth has slowed recently, which is stirring some anxiety about the strength of the U.S. economy. Those misgivings are likely accentuated by erratic inflation readings in recent months and angst surrounding the upcoming presidential elections, both of which naturally cause heartburn for most Americans.

However, data that is weaker than last year doesn’t necessarily mean weak. That’s especially true compared to the back half of last year, when the economy grew at an annualized pace of 4.9% and 3.4% during the third and fourth quarters, respectively.

Yet, several data series are encouraging, including the stabilization of manufacturing generally and most of the consumer data. Case in point were personal income and spending figures (part of the Big 4 on slide 9) along with the freight trends (slide 10). Specifically, most of the freight data continues to firm with year-to-date figures running well ahead of last year.

Furthermore, the strength and consistency of the travel metrics underscores that most consumers are far from “tapped out” in our view.

Ultimately, while some economic data is cooling, most indicators appear to reflect an economy that’s solid, albeit softer than 2023 – but not weak. To wit, we believe the U.S. economy will grow around 2% year over year, which is less than 2.5% in 2023 and modestly below the 2.4% pre-pandemic trend. That’s roughly double the growth most expected for 2024, ourselves included, coming into the year.   

Bottom line

The U.S. economy remains resilient and should sidestep a recession. Most economic data continues to steadily improve, though crosscurrents have reappeared. Additionally, the cumulative impact of higher rates is weighing on economic growth. We maintain our view that the Fed will reduce rates at least once this year.