Customer Story

Economy expands at a moderate pace.

The final Q1 2024 Gross Domestic Product (GDP) reading came in at 1.4%, reflecting decelerations in consumer spending, exports and government spending. Residential fixed investments partially offset these movements. The Federal Reserve forecasts GDP to grow at 2.1% in 2024 and 2.0% for 2025 and 2026. 

Monetary policy expected to ease by Q4 2024 or Q1 2025. 

Federal funds futures and policy maker guidance suggest cuts totaling 50 basis points for this year, with the first 25 basis point rate cut occurring at the September Federal Open Market Committee meeting.    Quantitative Tightening (the process of reducing bond holdings) decreased 37% to $60 billion per month in May. 

Some consumers are financially stressed.

Consumer loan delinquencies have increased every quarter since Q3 2021, though they remain below the 20-year year average. This trend may be in part due to the cumulative impacts of high inflation over the last four years. 

Commercial real estate worries persist.   

Concern over the deterioration of commercial real estate (CRE) values is a concern for some regional banks like New York Community Bank. It remains too early to determine if weakness in CRE will spread to other investment classes. 

Fiscal policy is an increasing concern. 

The current pace of federal spending adds about $1 trillion to the national debt every 100 days (see chart below). The supply of treasury bonds is growing and may eventually put upward pressure on interest rates, taxes and/or inflation. 

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