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The key for 2024

One of the most important metrics for 2024, if not the most important, is going to be the unemployment rate. In the U.S., even after the rapid #ratehikes, only 3.7% of active population is unemployed. And it’s been running below 4% for 22 consecutive months, and if we exclude the pandemic hiatus, even more. This is key for several reasons: first, 2024 is an electoral year, and, in normal circumstances, people vote with their pockets, and as of today, and according to statistics, they’re full. Second, running a full employment economy with low inflation, is every central banker dream, and although everybody understand this is a very unstable equilibrium point, we can check that box too. Which means the Fed is in a good position to close the year and start the new one. Pressure is low. Third, #ratecuts will start on the back of a (meaningful) spike in unemployment above 4%. That’s the bogey. When that happens, pressure will rise, markets will react, and the Fed will be forced to act.

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