Real US GDP to rise 3.2% in Q4, Wells Fargo says
Wells Fargo forecasts a 3.2% rise in US real GDP for Q4, with personal consumption also expected to advance by the same percentage. Chief Economist Jay Bryson noted that while moderation is anticipated due to tighter monetary policy, improved household finances and a strong labor market have led to an increased consumer spending outlook. Payroll growth is projected to rise to 128K. Inflation is expected to remain above 2% until H2 2026, with the Fed likely to implement further rate cuts in the coming months.
Real GDP in the US is set to rise 3.2% in the current quarter, Wells Fargo said Friday, but some moderation appears likely due to the impending effects of tighter monetary policy on households and businesses.
Wells Fargo economists led by Chief Economist Jay Bryson said in a note that real personal consumption expenditures are also expected to advance 3.2%.
“A moderation should still soon begin to set in; however, household finances standing on more secure footing and a firmer labor market outlook have led us to boost our near-term forecast for consumer spending,” Bryson said.
The strong jobs report for September has eased concerns about the labor market immediately worsening and suggests it may hold up better down the line than the firm expected, the note said.
Bryson said his team lifted its payroll growth outlook for the fourth quarter to 128K from its earlier view for 105K. “The upward trend in the unemployment rate since the start of the year is likely to resume, but peak in Q4 at a lower rate,” he said.
Well Fargo didn’t make any significant changes to its inflation outlook. “Although the ride back to the FOMC's 2% target will continue to be bumpy, the conditions for additional progress remain largely in place,” Bryson said. “The headline PCE deflator should reach the Fed's 2% target in the near future.”
The firm said core inflation is expected to remain just above 2% until H2 2026.
The Fed, after delivering a 50-basis-point rate cut last month, is seen making 25-basis-point cuts in November and December, the note said. After that, it added, another 125 basis points of cuts will be needed to get the federal funds target rate nearer to neutral territory.
More on the U.S. Economy
- Producer price index flatlines M/M in September, Y/Y rate rises more than expected
- September CPI rises more than expected, indicating inflation risks remain
- Atlanta Fed's Bostic is 'definitely open' to skipping rate cut in November - report
- September CPI Report: Underlying Stubbornness Not Enough To Alter The Fed's Course