US consumer confidence deteriorating and economic growth moderating suggest weakening demand that could ease inflation pressures and support lower rate expectations
Too little corroboration in the last 3 days to call a trend (2 articles). Watching for it to gain traction.
US consumer confidence has deteriorated to seven-month lows and economic growth is moderating, suggesting weakening demand that could ease inflation pressures and support lower rate expectations. Sources note that recent economic data have been mostly weaker than expected, reducing the case for sustained high rates.
Deteriorating growth momentum and consumer confidence reduce the Fed's tolerance for maintaining restrictive policy, as the risk of demand destruction increases relative to inflation risks. Weakening economic data creates a structural shift in the policy reaction function toward accommodation, allowing yields to decline as rate-cut expectations rise.
"Economic data released on Tuesday were mostly weaker than expected. The U.S. Conference Board's consumer confidence index fell to a 7-month low of 89.4 in August, weaker than expectations of 90.3. Also, U.S. July new home sales fell -10.5% m/m to a 6-month low of 607K, weaker than expectations of 620K."
"US consumer confidence fell in July as Americans' views about current business conditions and the labor market deteriorated. An indicator of present conditions dropped to the lowest since 2021."