Taking Stock: Executive Summary September 30, 2024

Q3 In Review:

For a while there, it looked like the 2024 market rally might be in trouble during the third quarter, with mid-quarter job reports reflecting a cooling labor market and stocks taking a hit. But in September, the Federal Reserve cut interest rates by a larger-than expected 50 bps, and at the end of the roller coaster ride, stocks finished up.  And so, the bull market continues, surviving one of the steepest rate hiking cycles in modern history. 

And despite continued uncertainties and persistent shocks, the U.S. economy continues to prove resilient.   

Recent Economic Data:

Gross Domestic Product (GDP).  The GDPNow model estimate for real GDP growth in Q3 2024 is 3.4% (seasonally adjusted annual rate; estimate released October 18, 2024) …  more than double the previous quarter at 1.6%.  (A growth rate between 2% and 3% is commonly considered “normal.”)  The International Monetary Fund (IMF) recently reported that the U.S. is leading advanced economies for a second consecutive year. “Strong growth forecast has come along with progress on inflation in the U.S.,” IMF chief economist Pierre-Olivier Gourinchas said. “There is strong productivity growth when we look at the U.S.”

Unemployment.  Total non-farm payroll employment rose by 254,000 in September, and the unemployment rate was unchanged at 4.1%.  

Consumer Confidence.  The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, experienced its largest one-month decline in three years, falling from 105.6 in August to 98.7 in September, with consumers concerned about jobs and inflation.  (The index is benched marked at 100, set in 1985.)

Consumer Price Index (CPI).   The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 0.2 % on a seasonally adjusted basis, following the same increase for both July and August.  Over the last 12 months, the all-items index increased 2.4% before seasonal adjustment, the smallest increase since February 2021  -- a good sign that inflation may be drifting down to the Fed’s 2% target. 

Earnings.   On September 30, 2024, the estimated (year-over-year) earnings growth rate for the S&P 500 for Q3 2024 was expected to slow to 4.3% (following 8.93% estimated for Q2).  If this is the actual growth rate for the quarter, it will mark the fifth straight quarter of earnings growth, but the lowest earnings growth since Q2 2023. 

Housing.  The U.S. housing market remains weighed down by higher mortgage rates and home prices.  Privately-owned housing starts in September 2024 were at a seasonally adjusted annual rate of 1,354,000, 5.7% below the September 2023 rate, and existing home sales dropped to a 14-year low; however, despite these headwinds, U.S. home builder confidence rose for the second consecutive quarter. 

Looking Ahead:

What does the economy hold in the coming months?  I mean, we’re still waiting for that mythical “soft landing” … or could a recession still be on the horizon?  

We see the broader trend indicating an economy experiencing healthy, moderate growth, and the long-awaited decision to begin cutting interest rates indicates the Fed agrees.  Our position hasn’t changed over the past quarter … The U.S. economy continued to grow (albeit at a slower pace).  The job market remains solid, although cooling.  Inflation is easing, and the Fed expects to start cutting rates later this year …  and America is in pretty good shape according to most economic indicators.  We now see an even stronger probability for that soft landing we have been hoping for, a normalization of inflation without pushing the economy into recession, as we move into 2025.  

On a personal note, our thoughts and prayers are with all those impacted by the devastation unleashed by the recent back-to-back hurricanes.  The road to recovery will be a long one for many in the Southeast.  We hope that you and yours are safe and the turmoil has been manageable.  

We are grateful that CORE was able to maintain operations with minimal interruption by implementing established remote protocols, and we are happy to report that we were back in the office, fully operational (and, most importantly, SAFE) within a day of Milton.  In thankful appreciation, we have donated to hurricane relief in honor of you, our clients.   

"In the middle of difficulty, lies opportunity." – Albert Einstein

We are committed to serve you with the highest standard of care in keeping with our corporate mission of 

Building Relationships … Enhancing Lives.

Executive Summary Sources:

https://www.atlantafed.org/cqer/research/gdpnow

https://www.bea.gov/news/2024/gross-domestic-product-third-estimate-corporate-profits-revised-estimate-and-gdp-0

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.conference-board.org/topics/consumer-confidence

https://www.bls.gov/news.release/pdf/cpi.pdf

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_101824.pdf

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

https://www.morningstar.com/markets/q3-review-q4-2024-market-outlook

https://www.forbes.com/advisor/investing/fed-funds-rate-history/

IMF Raises U.S. Economic Growth Forecast for 2024 While Overall Global Output Remains Unchanged | Economy | U.S. News

https://www.reuters.com/markets/us/us-home-builder-confidence-rises-second-straight-month-2024-10-17/

S&P 500 Earnings Season Update: August 9, 2024

https://www.morningstar.com/indexes/dji/!dji/performance

https://www.morningstar.com/indexes/xnas/@cco/performance

https://www.morningstar.com/indexes/spi/spx/performance

https://finance.yahoo.com/quote/%5EDJI/history?p=%5EDJI

https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC

https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC

The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.