The Pulse Thursday, August 29, 2024

U.S. Economic Growth Revision

The U.S. economy's growth in the second quarter of 2024 was revised upward to an annual rate of 3.0%, reflecting a stronger-than-expected performance. This revision from the initial 2.8% estimate is primarily attributed to robust consumer spending, which rose at a 2.9% annual rate, and significant business investment, particularly in equipment, which jumped by 10.8%. This marks a sharp acceleration from the 1.4% growth rate in the first quarter of 2024. The revision suggests that the economy remains resilient despite ongoing concerns about high interest rates and inflation​(BEA,Spectrum Local News,Las Vegas Sun).

Housing Market and Mortgage Rates

Mortgage rates in the U.S. have continued to decline, with the average rate on a 30-year fixed mortgage dropping to 6.35% from 6.46% last week. This decline is largely driven by expectations of upcoming Federal Reserve rate cuts as inflation continues to ease. However, despite the drop-in mortgage rates, the housing market remains largely stagnant, with potential homebuyers holding off on purchases in hopes of further rate reductions. The affordability crisis, driven by high home prices and still-elevated borrowing costs, continues to weigh heavily on the market​(Fox Business).

Retail Inflation for Farm and Rural Workers in India

In India, retail inflation for farm and rural workers showed signs of easing in July 2024. This reduction in inflation is primarily due to lower food prices, which have provided some relief to workers in these sectors. However, other costs, particularly those related to fuel and miscellaneous goods, continued to rise. The moderation in inflation is a positive development, but the ongoing rise in essential commodity prices indicates that inflationary pressures remain uneven across different sectors​(mint).

These developments highlight a complex economic landscape where positive growth figures are balanced by ongoing challenges in specific sectors such as housing and rural economies. The U.S. economy's strength is encouraging, but affordability issues in the housing market and varying inflation trends globally suggest that challenges remain.

Sources:

https://www.bea.gov/news/2024/gross-domestic-product-second-estimate-corporate-profits-preliminary-estimate-second, https://spectrumlocalnews.com/nys/central-ny/business/2024/08/29/us-economic-growth-for-last-quarter-is-revised-up-to-a-solid-3--annual-rate, https://lasvegassun.com/news/2024/aug/29/us-economic-growth-for-last-quarter-is-revised-up-/, https://www.foxbusiness.com/economy/mortgage-rates-august-29-2024,https://www.livemint.com/economy/latest-economy-news-today-live-updates-august-29-2024-11724903465705-page-388.html,

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