Quarterly Outlook: Inflation Eases, Recession Risk Falls

Main Takeaway

Although risks remain, the economy has successfully navigated the path toward lower inflation without triggering a recession. Fiscal spending and the expectation that the Federal Reserve will cut interest rates have buoyed the American economy. Rates will likely stay higher for longer than anticipated at the start of the year, which continues to squeeze certain sectors. Inflation continues to stabilize in developed countries, and the likelihood of a global recession has declined.

Top Risks

Although fiscal policies have boosted economic growth, policymakers seem unwilling to navigate back toward a balanced budget. With interest expenses continuing to grow, the debt-to-GDP ratio in the U.S. is on an unsustainable path. Consumer spending is weakening among younger and lower income households. Commercial real estate debt refinancing threatens to undermine regional banks, while a trend toward domestic production threatens higher inflation.

Sources of Stability

Globally, inflation has subsided and the threat of a recession over the next 12 months is on par with a “normal” economy. Other central banks, such as Canada and Europe, have started to reduce their target interest rates. The Fed has indicated its next move will likely be a rate cut, giving businesses and consumers more confidence to spend. Interest rates for businesses, measured by credit spreads, have fallen since the Fed’s change in messaging.

Quarterly Outlook PDF Download

 

For our latest perspectives on markets and economic conditions, view our Quarterly Outlook for Q3 2024.

 

 

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. Please be advised that Buckingham only shares video and content through our website, Facebook, LinkedIn page, and other official sources. We do not post investment advice on WhatsApp, Telegram, other interactive applications, or other similar platforms. Rather, Buckingham provides investment advice only through individualized interactions.

© 2024 Buckingham Wealth Partners. Buckingham Strategic Wealth, LLC, & Buckingham Strategic Partners, LLC (Collectively, Buckingham Wealth Partners). R-24-7406

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