Trio of Economic Reports Show a Strong End to 2024June 16,2025

Trio of Economic Reports Show a Strong End to 2024

An upward revision to gross domestic product, a rise in home sales and a positive outlook for future growth on Thursday provided a dose of economic holiday cheer.

By Tim Smart

Source: U.S. News

Nick Rohlman|The Gazette|AP-File

A combine harvests soybean on a farm, Oct. 2, 2024, near Palo, Iowa.

The leading indicators index, a measure of future economic activity, increased 0.3 in November for its first monthly gain since 2022, on strength in the stock market, decreasing unemployment claims and improvement in building permits.

The Conference Board’s index has been forecasting a negative economic outlook for some time as the economy defied the expectations of economists and still posted a 1.6% decline over the past six months. However, that was an improvement from the 1.9% dip in the prior six months.

“The US LEI rose in November for the first time since February 2022,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at the business organization. “A rebound in building permits, continued support from equities, improvement in average hours worked in manufacturing, and fewer initial unemployment claims boosted the LEI in November.”

“Overall, the rise in LEI is a positive sign for future economic activity in the U.S.,” Zabinska-La Monica added. “The Conference Board currently forecasts US GDP to expand by 2.7% in 2024, but growth to slow to 2.0% in 2025.”

The report came as two other readings of economic activity – gross domestic product and existing home sales – came in strong on Thursday.

The Bureau of Economic Analysis said that gross domestic product increased by 3.1% in the third quarter, an upward revision from the prior estimate of 2.8% and a sign that the economy picked up some steam in the second half of the year.

The gain came on stronger consumer spending and exports. The Federal Reserve Bank of Atlanta’s GDPNow forecast is projecting 3.2% growth in the fourth quarter.

Meanwhile, the National Association of Realtors said that sales of existing homes rose by 4,.8% in November to an annual rate of 4.15 million – the best year-over-year performance since June 2021. The median sales price rose 4.7% from November 2023 to $406,100, marking 17 consecutive months of year-over-year price gains.

"Home sales momentum is building," said NAR Chief Economist Lawrence Yun. "More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%."

Stronger economic growth and inflation that continues to remain sticky led the Fed to project half as many – two rather than four – likely cuts to interest rates next year. That and the fact the central bank cut rates Wednesday by a quarter point led to a 1,100-point sell-off in the Dow Jones Industrial Average.

The drop came before news broke that Congress is planning to go back to the drawing board to avert a pending government shutdown Friday at midnight. President-elect Donald Trump announced his opposition to the deal after Elon Musk sent a barrage of social media posts decrying the 1,547-page bill.

However, it is not clear Speaker Mike Johnson can muster the votes to get agreement with the Democratic Senate, making it difficult to craft a deal within the next two days.

Trump is no stranger to shutdowns, having presided over the 2019 one that lasted longer than any other at 35 days. That followed an impasse with Congress over funding for Trump’s border wall.

The public blamed Trump and Republicans for the interruption in government, but there are a cadre of House GOP members who favor a more antagonistic role while others fear that Musk and Trump will go after them the next time they face reelection.

The uncertainty over the federal budget comes as markets have grown increasingly wary about some of Trump’s proposals and their potential effect on inflation and growth. With the latest revision to GDP, it is clear the economy is operating well above its so-called potential, deemed as around 1.8% annual growth. President Joe Biden is leaving office and Trump with an economy that is over performing and that is being reflected in interest rates that have increased since the Fed began cutting rates in September.

“Consumer spending, exports and business investment increased in the third quarter contributing to the upward revision,” said Chris Rupkey, chief economist at fwdbonds.com. “The consumer showed no concern about the upcoming elections with real consumption expenditures soaring 3.7% in the third quarter. Stay tuned. The economy looks picture perfect upon revision and the need to fire up growth by a new president and a new Congress seems unwise if not risky.”

Source: https://www.usnews.com/news/economy/articles/2024-12-19/trio-of-economic-reports-show-a-strong-end-to-2024