Data was cooler in April but one month does not make a trend

Current Trends

Job growth eased in April, and along with the moderation in wage growth indicates a downtick in labor demand across many industries. Still, the trend for job gains remains resilient, the unemployment rate is still below 4.0 percent, and job listings are widespread — all signs of lingering labor market tightness. Inflation was a little slower in April but prices for services continue to drive up costs for consumers and businesses. The Fed needs to see additional signs of slower inflation and economic activity in the coming months to shift to policy easing, with the initial rate cut likely postponed until September at the earliest.

Future Outlook

A recession in 2024 looks increasingly unlikely given the solid momentum for job gains and spending. That said, we expect hiring and spending will moderate in the second half of the year in response to elevated interest rates and rising prices — setting the stage for a weaker growth trend heading into 2025. Lower and middle-income households are struggling due to inflation, meager savings and rising debt burdens. This presents downside risk for future spending, especially if the labor market cools sharply. Rate cuts from the Fed look to be delayed until late 2024 (and maybe further), another downside concern that keeps recession risks alive for 2025.

Timely data and commentary on employment, financial markets, consumer activity, business performance and inflation, along with dials and charts that provide a scannable at-a-glance view. See our analysis of current economic conditions and our outlook for the months ahead.

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