New York, United States – Economic data reports have caused concern among investors this month, resulting in a downturn for the major US stock indices. The NASDAQ-100, closely associated with the US technology sector, experienced a 7.10% decline over the past month, reflecting changes in key economic indicators. This decline coincides with shifts in prominent economic metrics, including inflation, gross domestic product (GDP), and unemployment.

Inflation, measured by the Consumer Price Index (CPI), has seen a 0.82% increase with a year-over-year change of 3.48%. Market expectations for rates, measured by credit spreads in inflation-indexed bonds (“TIPS”), have shifted recently, indicating decreased confidence in the Federal Reserve’s ability to meet its 2% target rate. Additionally, the Federal Reserve relies on personal consumption expenditures (PCE) rather than plain CPI to gauge inflation.

GDP, a crucial measure of economic strength, has shown a slowdown in quarter-to-quarter results, falling below 2% for the first time since Q2 2022. While GDP and real GDP have increased year-over-year, a notable gap between the two suggests the impact of inflation on economic growth, particularly due to the country’s significant trade deficit.

Unemployment rates have been steadily decreasing since the 2020 lockdowns, remaining below 4% since 2022. However, concerns arise when considering the labor force participation rate, which reveals the percentage of the population engaged in the workforce, including those who have given up seeking employment. Despite low unemployment rates, the recovery in employment levels has not yet reached pre-pandemic levels.

The Federal Reserve has maintained interest rates and indicated a conservative approach to policy changes, affirming a commitment to monitor inflation risks closely. While inflation remains a key concern, current economic indicators present a mixed picture of the US economy, with varying trends in inflation, GDP, and employment levels.

Overall, the economic outlook suggests a nuanced trajectory for the US economy in the coming months, characterized by fluctuating inflation rates, stable GDP growth, and a labor market slowly returning to pre-pandemic norms. These factors contribute to a complex economic landscape that investors and policymakers alike continue to navigate.