Investing.com — Recent concerns about a potential economic slowdown have stirred considerable debate, but Yardeni Research offers a compelling counter-narrative.
As per the analysts, the U.S. economy displays a resilience that counters the prevailing concerns and suggests that intervention from the Federal Reserve may not be necessary to sustain growth.
“The latest batch of labor market indicators has caused a temporary “growth scare,” in our opinion,” the analysts said.
This sentiment, driven by some weak labor market indicators, is somewhat misleading. Despite these concerns, overall economic conditions—especially within the labor market—remain robust.
While recent payroll and household surveys reflect some vulnerabilities, they also reveal strength in sectors like healthcare, leisure, and construction, which have shown solid employment gains.
A closer look at the labor market reveals that it remains resilient, even if the headline numbers appear softer.
For instance, average weekly hours worked increased by 0.3% in August, which led to a 0.4% rise in aggregate weekly hours. This uptick suggests that real GDP growth could potentially surpass 3% annually, provided that productivity continues its recent upward trajectory.
Yardeni Research expects that productivity growth, which has been strong since the third quarter of 2023, will remain a key driver of economic expansion. This expectation reduces the urgency for major Fed intervention.
The market’s…
