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The latest numbers show the US economy is going strong

The Federal Reserve is reconvening later this week for its fourth interest rate meeting of the year.
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Posted at 5:37 PM, Jun 10, 2024

The latest numbers show the U.S. economy is going strong. While unemployment is up slightly, so are job growth and wages, while inflation is trending down.

But that's not necessarily great news for borrowers who are hoping for an interest rate cut from the Federal Reserve.

The Federal Reserve is reconvening later this week for its fourth interest rate meeting of the year. But because the latest data is painting an optimistic view of the economy, the likelihood of a rate cut is looking slim.

"The economy is coming back from pandemic years in vengeance," said Kishore Kulkarni, a professor of economics with Metropolitan State University of Denver.

Kulkarni said the latest economic news is exciting, with hundreds of thousands of new jobs added in May and inflation slowing once again in April.

But he says the strength of the labor market may be a worrying sign for the Federal Reserve.

"You cannot ask for a whole lot better sign for a very strong macro economy," Kulkarni said. "My hunch is that the Federal Reserve will shy away from lowering the interest rate this whole year."

The Fed will announce its decision Wednesday, the same day May's inflation report is released with the rate lingering at 5.25 to 5.5 for nearly a year.

Annual inflation has fallen drastically since its peak in 2022, ticking up in early 2024 before slightly dropping again in April to 3.4%, still above the Fed's 2% target.

A survey from the University of Michigan found inflation concerns contributed to a six–month low in consumer sentiment last month as recent data from McKinsey and Company found consumers are cutting back on discretionary spending and selectively splurging on experiences.

"We've seen people cutting cable bills, and cutting streaming services," said Aaron Cirksena, the founder and CEO of MDRN Capital. "They're doing this to basically just cut costs wherever they can so that basically they can spend money where they're getting more value out of it."

For those cutting back on spending, experts said high interest rates are great for opening a high-yield savings account to grow your money faster.