For months, stock markets have been buoyed by hopes that slowing inflation would prompt the Federal Reserve to cut interest rates sharply this year.
That wave of optimism has been tempered by some caution due to signs of stronger inflation in recent weeks. Investors and economists are still looking for the Fed to lower rates, though perhaps a bit later and less dramatically than anticipated.
Economic developments this week should help clarify what has become a cloudier 2024 outlook.
Fed Chair Jerome Powell will testify before Congress and could provide a more specific timeline for rate cuts.
And reports on job openings, service sector activity and February employment growth will shed light on whether the economy and labor market are cooling enough to help lower inflation from about 3% to the Fed’s 2% goal.
Is the crucial services sector growing faster than manufacturing?
30,000-foot-view: While factory activity has contracted for nearly 1½ years, the much larger service sector has expanded for 13 straight months. That’s largely because Americans have shifted their purchases from goods to services, such as dining out and traveling, since the pandemic has faded.
On Monday, the Institute for Supply Management is expected to announce that its service sector index showed growth again last month but at a moderately slower pace, according to economists surveyed by Bloomberg.
You should care because: The service sector makes up about 80% of the economy and the Fed is hoping it…
