The growth forecasts are 0.2 and 0.1 percentage point higher respectively, compared with the rating agency’s June forecasts, partly reflecting the impulse from financial conditions that turned more positive and partly on stronger core goods consumption than previously expected.
On a year-end basis, growth is expected to come in at 2 per cent in the fourth quarter (Q4) this year, down from 3.1 per cent in Q4 2023.
Aside from continued sluggishness in the housing and manufacturing sectors, most recent activity indicators suggest economic growth momentum continues to run slightly above trend, though it has moderated since the fourth quarter of last year.
An expansion of the labour force, rather than a fall in employment, has spurred the rise in the unemployment rate up to now—a key difference from previous cycles at the start of a recession, S&P Global said in a release.
Still, real income growth has softened, and there are signs of slowdown in discretionary consumption.
US businesses continue to face higher costs of capital and policy uncertainty in the near term, which will limit capital expenditure and hiring, and the unemployment rate will likely rise in the next several quarters—to 4.5 per cent by the end of 2025, from 4.2 per cent currently.
S&P Global forecasts inflation to slow further in the coming months.
Industrial production remains flat in the third quarter over the previous quarter.
Fibre2Fashion News Desk (DS)