KEMPNER CAPITAL MANAGEMENT, INC.
3rd QUARTER ECONOMIC NEWSLETTER
October 10, 2024
By Harris L. Kempner, Jr., President

We give up. We are no longer projecting a recession in the near future. So, what’s changed?

A. The Federal Reserve finally lowered interest rates by 50 basis points, which is already spurring increased activity in re-fi and housing and is a major potential economic boost by itself.

B. On September 26th, the BEA (U.S. Bureau of Economic Analysis) released several significant upward revisions to the GDP (Gross Domestic Product), GDI (Gross Domestic Income), and personal income. These revisions indicate that the economy has been much stronger than we had thought, and much more productive as well.

C. The September jobs report released earlier in October was substantially stronger than projected. Some 254,000 jobs were created, which is roughly 100,000 above the average estimate. It was the biggest gain in jobs in 6 months. Unemployment, which was projected to rise to 4.3%, actually decreased to 4.1%. This echoes and enhances the strength in the economy of the earlier comments.

Of course, there are risks. The Middle East conflict has the potential of substantially increasing energy prices, which would in turn cause higher gasoline prices and that would be a damper on the economy. Unusually, two major hurricanes, Helene in areas of Georgia, North Carolina, Tennessee, and Florida, and now Milton, which is building as we write and will hit Central Florida, could all impact substantially several of the faster growing regions of the U.S. economy. Nevertheless, on balance, we now believe the overall U.S. economy is going to go through all this without a recession.