Economists optimistic about future growth

Economists overall optimistic as Fed considers rate cut

What you probably already know: The Wall Street Journal on Thursday released the results of its quarterly economic survey, which asks economists and forecasters to share their take on the economic outlook. Overall, they seem to be pretty optimistic and are calling this a “normalization” rather than a slowdown.

Why? While growth has slowed, economists seem to agree that this was inevitable because the pace of the previous growth was unsustainable. They do not predict any significant increase in unemployment, even though the rate has climbed recently from 3.6% to 4.1%, and expect “slow but steady” improvement when it comes to inflation.

What it means: Part of the confidence around inflation is tied to the belief that the Federal Reserve will cut short-term interest rates three times this year, maybe as early as September now that inflation has slowed and unemployment has started to tick up.

What happens now? Fed Chair Jerome Powell refused to say this week when or if the Fed would cut interest rates, though there seem to be hints that it’s coming as soon as the Fed’s September meeting. The high cost of mortgages has done a number on the typically brisk summer housing market and that’s likely to mean lots of latent potential in the housing market should rates come back down.

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