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10 reasons the Fed won't cut rates in 2024, according to a chief economist

Fed chair Jerome Powell
Aaron Schwartz/Xinhua via Getty Images
  • Apollo chief economist Torsten Slok laid out 10 reasons the Fed won't cut rates in 2024.

  • Higher inflation readings, a resilient job market, and easing financial conditions are among the factors standing in the way of lower rates, he said.

  • "The reality is that the US economy is simply not slowing down, and the Fed pivot has provided a strong tailwind to growth since December," Slok said.

Add Apollo chief economist Torsten Slok to the growing chorus of people skeptical the US will see a rate cut this year.

"The reality is that the US economy is simply not slowing down, and the Fed pivot has provided a strong tailwind to growth since December," he wrote in a blog post on Friday. "As a result, the Fed will not cut rates this year, and rates are going to stay higher for longer."

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He offered 10 reasons why, along with some supporting charts.

1. The economy is too hot

Slok notes that growth expectations for the US are still being revised higher, suggesting the economy is reaccelerating, rather than slowing down.

apollo slok chart 1
Bloomberg / Apollo Chief Economist

2. Underlying inflation trends are moving higher, not cooling

 

apollo slok chart 2
apollo slok chart 2

BLS, Cleveland Fed, Atlanta Fed, Haver Analytics, Apollo Chief Economist

3. Supercore inflation, a measure preferred by Fed Chair Jerome Powell, is also increasing

4. The labor market is still very hot

Slok points out that the jobs market is still tight, jobless claims are low, and wage inflation has persistently stayed in the 4% to 5% range.

5. Small businesses are planning to raise prices further

apollo slok chart 3
NFIB, BEA, Haver Analytics, Apollo Chief Economist

6. Manufacturing trends reflect an upward trend in prices paid

Slok points out this is another leading indicator for inflation.

7. ISM services prices paid also on an upswing

8. An increasing number of small businesses say they'll increase wages

This is a factor that would further tighten the labor market and keep it hot.

apollo slok chart 5
apollo slok chart 5

RB of Atlanta, NFIB, Haver Analytics, Apollo Chief Economist.

9. Rent and home prices are rising

10. Financial conditions are still easing, suggesting further economic strength ahead

Slok highlights record-high investment-grade debt issuance, high high-yield issuance, rising IPO activity, accelerating M&A activity, tight credit spreads, and the stock market reaching new all-time highs as examples of this.

Read the original article on Business Insider