U.S. GDP data for the second quarter of 2024 will be released on July 25, 2024.

Model data shows that the economy is beginning to show signs of fatigue under the pressure of high inflation and high interest rates, which may prompt the Federal Reserve to consider relaxing monetary policy while inflation eases. The market remains cautious about the future direction of the economy, but there is still hope for achieving a "soft landing" of the economy.

Slowing GDP growth

According to the GDP Now model of the Atlanta branch of the Federal Reserve Bank of the United States, estimates as of June 20 show that the annual GDP growth rate in the second quarter of 2024 will be 3.0%, lower than the previous 3.1%. This reflects the impact of high inflation and interest rates on the economy.

Market expectations are cautious

The market's median forecast for GDP growth in the second quarter of 2024 is 0.5%, a significant decrease from the 2.0% in the previous quarter. Economic activity is showing a gradually slowing trend, with growth expected to be below 1% in the second and third quarters.

Impact of monetary policy

The economic slowdown has a significant impact on the monetary policy decisions of the Federal Reserve. If inflation eases as expected, the FOMC may start cutting interest rates in mid 2024, with a 25 basis point reduction at each meeting, with the goal of lowering the federal funds rate range to 4.00% -4.25% by the end of the year.

Market sentiment and expectations

The market is cautious about GDP data and concerned about the impact of high inflation and interest rates on consumer spending and corporate investment. The ability of the economy to withstand these unfavorable factors has surprised many analysts, who remain optimistic about achieving a "soft landing".