- Notes that a downside risk in GDP was a revision to GDI
- Instead, GDI was revised higher
- Fed not in a hurry to cut rates quickly, will be guided by data
- Rate cut process will play out ‘over some time’ with no need to go fast
- Fed will take everything into account at Nov meeting
- If economy evolves as expected, it will mean two more cuts this year, totalling 50 bps
- As long as inflation in new leases is relatively low, it will eventually show up but it looks like it will take longer than we thought
This is an important point and suggests that the Fed will be more hawkish. The GDI numbers were revised last week, after the Fed.
The Gross Domestic Income, an indicator that assesses economic activity based on income, showed stronger growth than initially reported. In the most recent quarter, GDI grew at a 3.4% rate, a significant upward revision from the 1.3% rate originally estimated. The previous quarter (January-March) also saw an upward adjustment, with GDI growth now reported at 3.0%, revised from the earlier estimate of 1.3%.
The change means that consumers will have more money to spend, keeping the economy strong.