JPMorgan_Econ_FI-United_States-113058405_13页_2mb

Summary

Executive Summary

• Date: 24 January 2025
• Reporters: Michael Feroli, Murat Tasci, Michael S. Hanson
• Key Focus: Analysis of economic conditions in the United States, including labor market, GDP growth, consumer confidence, and policy uncertainties.

Key Risks

• Immigration Measures: New policies may reduce labor force participation and affect employment. Freezing federal hiring and reducing immigration could decrease workforce growth.
• Tariffs: Proposed 25% tariffs on Canada and Mexico if announced could harm economic growth.
• Policy Uncertainty: Executive orders and trade policies remain a headwind for investment and growth.

Recent Data Highlights

Employment

• Job growth accelerated but may slow due to policy impacts. LA fires and deportations could affect January payroll figures.
• Federal employment stabilized with an annual increase of ~4k/month after large federal hiring freeze.

GDP and Economic Growth

• 4Q GDP rose 2.75% q/q (SAAR), with strong consumer spending. Services PMI softened due to weather but manufacturing improved.
• Durable goods orders declined slightly, while exports weakened amid trade risks. Economic growth is steady but risks may moderate future acceleration.

Consumer and Business Confidence

• Consumer confidence marginally higher than last quarter, with firms continuing to raise rates and weaken the dollar.
• Business inventories rose, leading to mixed manufacturing data, with computer investment declining but overall nondefense output stable.

Forecasts

• Pending home sales likely edged down amid higher mortgage rates, reducing new home sales significantly.
• Real GDP growth is expected at 2.7% q/q (SAAR) for 2024, with personal spending the main driver. Government and inventories are contributors.

Conclusion

Uncertainty from policy shifts risks economic deceleration, but the labor market remains steady with potential for further output gains.