Dear Clients, Considering the recent market pullback, we wanted to provide you with an update on some key economic data points to help you stay informed. The following information is current and sourced from a recent Economic Update by JP Morgan. Growth The U.S. economy showed resilience in the second quarter of 2024, with GDP growth hitting 2.8% quarter over quarter, surpassing the expected 1.9%. This brings our average growth rate for the first half of the year to 2.1%, which is very close to our country's historic average. This indicates a stable economic environment, even amid market fluctuations. Profits As the 2024 earnings season wraps up, most companies have reported their earnings, and the trend is promising. We are on track to see double-digit growth in year-over-year earnings per share on average. This robust earnings growth is a positive sign for investors, highlighting the strength and profitability of many companies. Risks While the overall economic outlook is positive, there are some risks to be aware of: The labor market is slowing slightly faster than anticipated. A slowing economy can react more dramatically to negative data. The Federal Reserve may delay lowering interest rates, which could impact economic growth. This is what has been dominating the news. Jobs The labor market is stabilizing, with the three-month moving average for jobs-added now being 170,000, a little less than expected. The unemployment rate has risen to 4.3%. Note, adding 170k jobs in a month is still a positive thing. Inflation In June, we saw positive signs on the inflation front. Headline CPI, energy prices, and core goods prices all fell, while shelter prices rose at the slowest rate in nearly three years. Prices are gradually moving toward the Federal Reserve's target, which should start to provide relief to consumers. Rates The Federal Reserve decided to keep interest rates steady at their recent July meeting but acknowledged the possibility of rate cuts as early as September. Given the recent labor market data, we might see the Fed cutting rates at a faster pace this year, which could provide further economic support. Equity Market The equity market year to date has done very well. The S&P 500 is still up over 10% on the year despite the recent volatility. Given the positive economic outlook we consider this current drop in the market a healthy correction. We hope you find this update helpful. We are in the process of making some minor adjustments to accounts in light of this economic data. If you have any questions or would like to discuss how these economic trends might impact your personal financial situation, please don't hesitate to reach out. Reference: Link Kindly, Karla White Vice- President of Waterstone Financial