September 2024 Economic & Market Update: What We're Watching as We Head Into Year-End
As we move into the final months of 2024, many of the conversations we're having with clients revolve around a familiar set of questions: Is the economy slowing? Will the Federal Reserve begin cutting interest rates? And what should investors expect from markets as we head toward year-end?
While uncertainty always exists, several economic indicators continue to suggest that the U.S. economy remains more resilient than many expected. In this update, we share our perspective on economic growth, inflation, interest rates, unemployment trends, and the factors currently influencing both stock and bond markets.
Economic Growth Continues to Surprise Investors
Despite concerns surrounding higher interest rates and slowing economic activity, the U.S. economy has continued to demonstrate resilience throughout much of 2024.
Recent GDP revisions showed stronger-than-expected economic growth during the second quarter, while corporate earnings have remained a key driver of market performance. Although economic growth has moderated compared to previous years, the overall backdrop remains healthier than many economists anticipated entering the year.
Why Market Volatility Is Normal
One of the themes we often discuss with clients is the importance of keeping market volatility in perspective.
Periods of volatility can feel uncomfortable, particularly when headlines amplify uncertainty. However, market pullbacks and corrections are a normal part of investing. Historically, declines of 5% or more occur regularly, and late summer through early fall has often been among the more volatile periods of the year.
While short-term market fluctuations can create anxiety, they do not necessarily signal a change in long-term trends.
The Labor Market and Why It Matters
Employment remains one of the most important indicators of economic health.
Although the unemployment rate has increased modestly in recent months, it remains relatively healthy by long-term historical standards. Labor market conditions influence everything from consumer spending and business confidence to inflation and Federal Reserve policy decisions.
For that reason, unemployment trends continue to be one of the economic data points we're watching most closely.
Federal Reserve Policy and Interest Rates
The Federal Reserve remains one of the most influential forces in today's investment environment.
After a series of aggressive interest rate increases that began in 2022, investors have increasingly focused on the possibility of future rate cuts. While the size of any potential reduction may be modest, it carries important implications for economic growth, inflation expectations, borrowing costs, and overall market sentiment.
As always, the path of interest rates will remain closely tied to inflation trends and broader economic conditions.
Staying Focused on the Bigger Picture
While headlines will continue to focus on interest rates, inflation, elections, and market volatility, we believe it remains important to focus on the factors that matter most: your financial plan, your goals, and your long-term objectives.
Economic cycles come and go, markets experience periods of uncertainty, and policy decisions evolve over time. Maintaining perspective and remaining disciplined through changing environments continues to be one of the most important components of successful long-term investing.
Watch the video to hear our latest thoughts on economic growth, unemployment, inflation, Federal Reserve policy, and the market trends shaping the remainder of 2024.
Disclosures
Janney Montgomery Scott LLC does not provide legal tax or accounting advice and the information contained herein should not be construed as such. Investors should be aware of potential risks associated with option investing. There are no guarantees that any investment will meet its objectives or that an investment can avoid losses. Past performance is not an indication of future performance. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed here. For more information about Janney, please see Janney's relationship Summary Form. CRS on www.janney.com/CRS which details all material facts about the scope in terms of our relationship with you and any potential conflicts of interest.
