PNC economists provide insight into key indicators that may have an impact on current business performance and the path ahead.

Federal Funds Rate

  • At its November meeting, the Federal Open Market Committee (FOMC) cut the federal funds rate (the committee’s key short-term policy rate) by 25 basis points, to a range of 4.50% to 4.75%. This followed a 50-basis point cut in the rate at the FOMC’s Sept. 18 meeting.
  • The FOMC was somewhat more hawkish compared to prior statements from its Sept. 18 meeting, changing language on easing inflation. The FOMC removed language about inflation “moving sustainably toward 2%” in its latest statement, although it kept the rest of the sentence, saying that risks between inflation and growth are roughly balanced.
  • PNC’s forecast is for an additional 25-basis-point cut in the fed funds rate at the last FOMC meeting of the year in mid-December, which would bring the rate down to a range of 4.25% to 4.50%. PNC then expects additional 25 basis point rate cuts in the first half of 2025, with the rate in a steady range of 3.25% to 3.50% in the second half of next year.

Employment

  • First-time jobless claims increased to 221,000 for the week ending Nov. 2 from an upwardly revised 218,000 in the prior week. Initial claims are up by 5,000 from a year ago. The four-week moving average dropped by 9,750 to 227,250 but is up somewhat from 211,750 in the same week last year, implying the U.S. labor market has softened over the past 12 months.
  • Continuing claims for unemployment insurance increased by 39,000 to 1.892 million for the week ending Oct. 26. Continuing claims are marginally higher compared to a year ago, when they stood at 1.823 million. Moreover, the four-week moving average increased by 8,500 to 1.875 million and is up from 1.814 million a year ago, signaling it is taking unemployed workers a little longer to find a new job.
  • PNC expects a further softening in the labor market as economic growth moderates, with average job gains of 125,000-150,000 a month in the final two months of this year (including a big rebound in November) and about 100,000 per month in the first half of 2025. As a result, the unemployment rate will rise to around 4.5% by mid-year 2025 and then will likely drift slightly lower in 2026 as job growth accelerates amid lower interest rates.

Brilliant Begins Here

PNC economists provide analyses and forecasts of national, regional, and global economic and financial trends. For more economic data and reports, visit www.pnc.com/economicrelease.

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