NEW YORK - In the latest report by S&P Global Ratings, the U.S. economy is described as resilient, with expectations for policy rate cuts starting around mid-2024. The report, titled "Global Economic Outlook Q2 2024: Still Resilient, With Gradual Rate Cuts Ahead," was released today.
Paul Gruenwald, Global Chief Economist at S&P Global Ratings, stated that while the macroeconomic response to the higher rate environment had been largely anticipated, the U.S. economy's performance stands out as activity slows and inflation pressure decreases. S&P Global Ratings maintains a "higher-for-longer" view on policy rates but forecasts the first cuts by major central banks to occur around mid-2024, followed by gradual subsequent cuts as the path back to neutral policy rates is expected to take time.
The resilience of labor markets is a significant factor in the report's relatively positive economic outlook. The labor demand is predicted to remain strong, contributing to the forecast for higher growth in 2024. Upward revisions to the growth estimates for the U.S. and India have led to an increase in world GDP growth projections by 40 basis points, reaching 3.2%.
The report underscores the strength of the labor market, characterized by low unemployment and robust wage growth, as foundational to the baseline scenario of a soft landing for the economy. However, it also outlines potential downside risks, including a potential decline in services demand, a stronger U.S. dollar, and geopolitical risks, such as upcoming elections.
It's important to note that this report does not represent a rating action. The full report is accessible to subscribers of RatingsDirect on the Capital IQ platform and can be purchased by non-subscribers via email request to S&P Global Ratings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.