NRF: U.S. Economy Heading Toward a 'Soft Landing'
WASHINGTON, D.C. — With an economy whose growth is steady, if slowing, and inflation down as the Federal Reserve prepares to lower interest rates, the United States appears to have dodged a recession, according to the National Retail Federation (NRF).
The September issue of NRF's "Monthly Economic Review" found annualized gross domestic product growth for the second quarter has been revised upward to 3% from the original report of 2.8%. Consumer spending, the largest component of GDP, was also revised up to 2.9% growth for the quarter from 2.3%.
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Spending overall has moderated this year after accelerating in the second half of 2023 but "the American consumer has been resilient."
"The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024," NRF Chief Economist Jack Kleinhenz said in the report. "Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation."
Despite an "eventful August" with initial reports of rising unemployment and a slowdown in manufacturing, the updated data has "calmed fears of a deteriorating U.S. economy," Kleinhenz said. "Concerns are now focused on the direction of the labor market and the possibility of a job market slowdown, but a recession is far less likely."
Year-over-year growth in the Personal Consumption Expenditures Price Index — the Fed's preferred measure of inflation — was at 2.5% in July, unchanged from June and only half a percentage point above the Fed's target of 2%.
In the labor market, only 114,000 jobs were added in July, lower than expected, and the unemployment rate rose to 4.3% from 4.1% in June. Despite the increase, the unemployment rate is still within the normal range, Kleinhenz said.
Kleinhenz said the "keynote event" in August was Fed Chairman Jerome Powell saying "the time has come" for lower interest rates, and a reduction is widely expected to happen when the Fed meets on rates this month.
Going forward, Kleinhenz said lower rates should benefit households under pressure from loans used to meet daily needs. Additionally, employers are expected to keep adding jobs, if at a slower pace than earlier this year, while price increases for goods and services seem to be coming under control and unemployment remains at near historically low levels.
Washington, D.C.-based NRF is the world's largest retail trade association. It advocates for the people, brands, policies and ideas of the nation's largest private-sector employer, which contributes $5.3 trillion to annual GDP and supports more than one in four U.S. jobs.
