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Jeffrey Greenberg/Universal Images Group via Getty ImagesThe recent rebound in inflation is about to end, according to a note from Raymond James.The firm highlighted four reasons why rising prices should reverse, including an expected slowdown in economic growth.Raymond James’ CIO also explained why he still sees the Fed cutting interest rates three times in 2024.A string of back-to-back-to-back inflation reports that were stronger than expected has upended market expectations of what path the Federal Reserve might take this year.At the start of the year, markets expected as many as seven interest rate cuts from the Fed in 2024, but that number has dwindled to less than two after the higher-than-expected March inflation report.But according to Raymond James chief investment officer Larry Adam, inflation is set to reverse lower and the Fed is going to cut interest rates at least three times this year.These are the four reasons why Adam is confident that the recent uptick in inflation is not the start of a new trend like it was in the 1970’s.1. Economic growth should begin to temperWhile the economy should continue to avert a recession, it is unlikely to grow at such a strong rate like it did over the past two years, according to Adam.Adam pointed to small business optimism falling to its lowest level since 2012. On top of that, the percentage of businesses reporting weak sales has jumped to its highest level in almost three years.Additionally, the recent rebound in inflation during the first three months of 2024 has also led to a rebound in interest rates, with mortgage rates back above 7% and credit card interest rates hovering near record levels. Those high interest rates should dampen spending.”This, plus a softening labor market, dwindling savings, high credit card balances and rising delinquencies suggest the momentum in consumer spending should start to slow, but not collapse. This should lead GDP to falling below 1% in the next …
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