S&P Economist Satyam Panday on US Economic Slowdown and Unemployment Forecast

US Economic Outlook Shift

• 📉 US GDP growth estimates are being revised downwards, with quarterly sequential growth rates expected to slow to around 1.6%.
• ⚠️ The balance of economic risks has shifted to the downside, influenced by policy changes.

Impact on Unemployment

• 📈 Once economic growth slows, the unemployment rate is predicted to drift upwards.
• 🎯 The forecast suggests unemployment could reach approximately 4.6% by mid-next year.
• 📉 A subsequent decrease in unemployment is anticipated as the Federal Reserve begins cutting rates.

Inflationary Pressures and Tariffs

• 🚗 Auto tariffs are expected to add to costs, potentially increasing auto prices and impacting the CPI inflation by about 30 basis points.
• 📊 While tariffs may cause a one-time price level bump, the expectation is for disinflationary pressures to re-emerge early next year.
• 🏦 The Federal Reserve is likely to pause rate cuts for now, monitoring demand weakness before making further decisions.

Labor Force Dynamics

• 👵 The labor force participation rate is projected to move downwards due to an aging society.
• ✂️ The Federal Reserve is expected to cut rates by approximately 100 basis points next year.