CBWY Blog

As the First Quarter comes to an end, many were hoping that the Federal Reserve would be lowering the Federal Funds (Fed Funds) Rate by now.  However, the Economy continues to turn out higher economic growth and job growth.  Meanwhile, credit card balances are rising to all-time highs as consumer spending continues to grow.  How long this trend continues remains to be seen, but most economists are predicting that the Economy will slow as we move through year, and the Fed will likely reduce the Fed Funds Rate as much as 75 basis points (3/4 of one percent) before yearend 2024. 

As I have mentioned in the past, it is normal for the Economy to go through ups and downs.  When the Economy is growing, demand for goods and services grow which causes employment to grow.  Once the Economy grows past the point where labor and supplies begin to be rationed, this lowers the unemployment rate, raises prices of limited goods and services, and pushes inflation higher.  To slow the growth, the Federal Reserve raises the Fed Funds Rate to push interest rates higher.  This causes consumption of goods and services to slow because costs get too high.  The result is lower demand which causes companies to slow their production and lay off excess employees causing unemployment rates to rise. 

At this point in time, we are seeing the beginning of a slow down.   There is a definite slowdown in home buying due primarily to the higher cost of home construction, coupled with higher interest rates and insurance costs.  Additionally, the growth in consumer credit card debt suggests that consumers are outspending their disposable income.  Generally, recessions begin when consumer spending slows.  Consumer spending is one of the strongest components of the economic indicators and is very predictive of economic slowdowns. 

We hear much about a “soft” landing to the Economy.  A soft landing occurs when the slowdown is gradual, and it does not require the Fed to aggressively act to offset the impact of the slowdown.  I remain hopeful that the Economy is currently heading in that direction. 

Once the Fed begins to reduce rates, you can expect that short-term rates will fall accordingly, and long-term rates will return to a normal upward sloping yield curve. 

Given the outlook, now would be a good time to consider laddering CD maturities to take advantage of the likely changes in interest rates. 

We will continue to keep you posted as we move through the year.

Shred Day is Back

We are hosting our annual community Shred Day!

May 14, 2024

Commerce Bank of Wyoming: 1575 Dewar Drive, Suite 100 , Rock Springs, WY 82901

10:00am-1:00pm

Bring your sensitive documents to shred. Each individual will be limited to three standard sized boxes of documents to shred. Items can include scam mailings, personal documents and bank statements.  Please make sure all metal is removed from any items.  We look forward to seeing you!

Community Impact Report

Check out the full report here...