Key highlights:

• Activity data has been soft early in Q2. While we still expect GDP to grow by around 0.5% q/q in Q2, a downward revision to the Q1 outcome lowers our forecast for 2024 year average growth to 2.3% (was 2.4%).
• Labour market pressures continue to ease even as net job creation remains solid.
• The spike in monthly inflation readings seen early in the year continues to unwind; the May CPI print came in lower than expected.
• The Fed left rates unchanged at its June meeting. While the median Fed member view sees only one 25bps rate cut by end 2024, we still expect 50bps of cuts and see a slightly faster pace of rate cuts over 2025. We now, however, see rate cuts pausing in 2026 when the target range reaches 2.75%-3.00% (previously 2.50 to 2.75%).

Find out more in NAB’s US Economic Update (14 June 2024)