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The Beige Page: June 2024

The Beige Page distills and analyzes the latest macroeconomic trends shaping the opinions of central bankers and moving markets.

The Fed and Inflation Converge, Kind of

  • Markets and spectators caught double the drama last week as May’s Consumer Price Index data arrived just a few hours before the Federal Reserve’s June policy decision, where policymakers voted to hold interest rates in place.

  • The consumer price index fell slightly on an annual basis, ticking down to 3.3%, a positive shift relative to earlier in the year but still not enough to sway Fed policymakers further in the direction of rate cuts. By the end of the trading day last Wednesday, federal funds futures tracked by the Chicago Mercantile Exchange forecasted that two rate cuts would occur between now and the end of the year. The forecast is a significant shift from the three-rate cuts projected as the year began, but markers have gradually recalibrated expectations as inflation pressures persisted. Wednesday's decision was in line with expectations.

  • National economic data preceding the Fed meeting showed the US economy and labor market continuing to expand. According to the Federal Reserve’s May 29th Beige Book, most Fed Districts reported slight or modest growth during the six-week survey period, though two noted no change. Meanwhile, May’s job report from the Bureau of Labor Statistics reported that 272k jobs were added in the month, sharply beating expectations.

  • Delving further, retail spending was mostly unchanged over the six weeks, while auto sales remained roughly flat. Travel and tourism strengthened, driven by increases in leisure and business travel, but the outlook for the hospitality industry was mixed. High interest rates continue to constrain consumer lending, which aligns with the Fed's strategy, but broader measures of consumer demand remain robust.

‘Til Debt Do Us Part

  • In April, Chicago Fed President Austan Goolsbee warned that the Fed is increasingly concerned about the rate of consumer delinquencies on items like credit cards, car loans, and rent. According to the latest data from the Federal Reserve Bank of New York, delinquency rates rose across all debt types for all age groups during the first quarter of 2024. The rate of debt transitioning into delinquency continues to top pre-pandemic levels.

  • The rise comes amid several years of an increasing share of Americans struggling to afford basic needs. On the one hand, robust consumer spending levels point to a strong US economy; however, they also reflect a new normal for household expenditures. Lower-income households are particularly stretched and have begun to ease off some discretionary spending. Still, higher interest rates may continue to limit their ability to keep pace with expenses.

  • It’s worth noting that data from both the BLS and Federal Reserve show wage growth continuing to moderate toward pre-pandemic levels, dampening the effect of recent disinflation on consumers’ real and perceived spending power. This simultaneous wage and price disinflation helps explain the disconnect between people's feelings about the economy and its actual performance. Still, while consumer sentiment has trended downward over the past half-year, spending levels continue to defy them. Climbing consumer debt levels adds another potential cause and effect to consider.

For Homes, No Ceiling?

  • Despite staggering pandemic-era home value growth, housing prices are expected to continue to climb over the coming years. According to Fannie Mae’s Q2 2024 Home Price Expectations Survey (HPES), produced in collaboration with Pulsenomics, home prices are projected to finish the year up 4.3% before receding to 3.2% in 2025. These projections come on the heels of several record annual increases in home prices over the past year. Data from S&P CoreLogic in May showed that the nation’s 20 largest metros experienced a record 6.5% year-over-year increase through the end of March.

  • Rising interest rates in recent years have resulted in a dampened housing supply but increasingly pent-up demand. As mortgage rates rose to generational highs, the housing market began to experience a "lock-in effect" where existing homeowners locked into older contracts that were, on average, underwritten with lower interest rates became increasingly incentivized to stay out of the for-sale market. Listings fell, and since January 2022, existing home sales have mostly shrunk. These homeowners, along with other wishful homeowners, have waited on the sideline since.

  • However, special reporting in Fannie’s analysis details that this lock-in effect is beginning to fade, potentially adding bullish sentiment to the market. Citing data from, newly listed homes have risen since the start of 2024, and in April, they were 12.2% higher than their level one year before. 84% of respondents in the HPES believe that the lock-in effect will continue to diminish and bring more would-be buyers and sellers into the market.


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