Demand Declines Signal Economic Challenges

Inflation is on the rise, reaching 4.3%, the highest since October 2021, indicating potential rate cuts from the Federal Reserve. Job growth has slowed, and while hourly earnings initially boosted consumer enthusiasm, recent drops in earnings growth point to diminished spending power. The market reflects these trends, with S&P and NASDAQ up 11% year to date, yet concerns about a possible recession loom. Non-farm payrolls show discrepancies due to frequent revisions and are likely overestimated, mirroring GDP trends. Businesses, especially cyclical ones like Airbnb, are reporting weaker demand, suggesting that previously available capital has been depleted. This may highlight an impending recession, expected to be more evident in the latter half of the year, bringing into question how aggressively the Fed will respond with rate cuts.