The Consumer Price Index (CPI), measuring inflation across the US economy, grew by 3.4 percent on the year in April 2024. The CPI is slightly down from the 3.5 percent seen in March 2024, but a steady increase from the 3.2 and 3.1 percent posted in February and January of 2024. The CPI’s stubbornness to fall, and its uptick in Q1 2024, could be answerable for the subtle shift in personal expenditure habits.

As a result, any change to the interest rate set by The Federal Reserve (the Fed) will not be taken lightly. The federal funds rate was left at a 23-year high, between 5.25-5.50 percent, and will only shift downwards when inflation sustainably transitions down.

The labor market continues to perform well, with 175,000 new payroll jobs being added in April 2024, despite high rates and growing inflation. Average hourly earnings growth, however, reduced to 3.9 percent on the year in April 2024 - the lowest rate since June 2021. Should wage growth temper further, the Fed would have more scope to maneuver when it comes to interest rate setting - knowing the economy might not overheat.

Despite some bullish signs, the International Monetary Fund (IMF) recently revised its US economic outlook in April 2024. According to their latest forecasts, US GDP is now expected to grow by 2.7 percent in 2024, which is an upward revision of 0.6 percentage point from their estimate in January 2024.

Notable headwinds exist, with elevated levels of indebtedness, election uncertainties, and fiscal worries a concern; the US economy, however, remains in a position of strength despite these challenges.