Key highlights:

• The growth outlook has improved on the back of recent activity data and positive revisions to historical household income and profits. We now expect GDP growth of 2.7% (previously 2.6%) for 2024 and 1.9% (was 1.7%) for 2025.
• Solid payrolls growth and a fall in the unemployment rate in September help alleviate concerns employment growth is slowing sharply.
• The Fed cut rates in September by 50 bps, and we retain our view that the total reduction in rates by year end will be 100 bps. Recent data indicates the near term risk to this call is a pause rather than another 50 bps cut. While a pause is possible, our view is that this will require a reassessment by the Fed of its view that the labour market is now balanced and inflation is on track to fall back to 2%, the drivers of the ‘recalibration’ that it started in September.

Find out more in NAB’s US Economic Update (11 October 2024)