We are raising our 2Q24 GDP forecast to 1.9% from 1.5% and are reducing our full-year 2024 GDP forecast to 1.8% from 2%. The U.S. economy is chugging along, but persistent inflation is delaying the interest-rate relief that many consumers need to finance home renovations and other big-ticket purchases, such as furniture and automobiles. We saw evidence of this in last week's advance estimate of first-quarter GDP released by the Bureau of Economic Analysis. U.S. GDP expanded in 1Q at an annualized rate of 1.6%. That was well below the 2.5% consensus and 3.4% growth in the fourth quarter of 2023. As we discussed in our April webinar, the all-important consumer economy is "mixed," but it is still driving the train. Consumer spending, designated as Personal Consumption Expenditures (PCE) in the GDP report, contributed 1.68 points of the 1.6% growth in 1Q (offset by lower inventory investment and the trade deficit). PCE grew 2.5%, but the consumer category was carried by the huge services component, which was up 4.0%. Consumer spending on goods declined 0.4%, which should worry the Fed. Within goods, nondurables were flat but durables were down 1.2%. Our 3Q GDP estimate remains at 1.8%. Our 4Q estimate is now 2.0% down from 2.3%. One potential headwind to our 4Q estimate is that the Purchasing Managers Index for services (reported last Friday) came in at a contractionary 49.4 in April, ending a run of 15 months above 50. Our forecast is for GDP to grow 2.0% in 2025, with an acceleration to 2.3% in the second half of the year. One concern is that the one-percentage-point drop in the 10-year Treasury yield at the end of 2023 likely stoked growth in 4Q23 and 1Q24. The benchmark's 70-basis-point yield increase in 1Q could slow the train in 3Q and 4Q, particularly with the yield curve still inverted. While economic growth may be uneven in 2024 and 2025, we believe the Fed has the ability to bolster growth if needed.

Tesla Inc. manufactures and sells electric vehicles, and energy generation and storage systems. The company was founded in 2003 and went public in June 2010 (initial public offering at $17 per share on June 29, 2010). Tesla has approximately 49,000 employees. It recently moved its headquarters to Austin, Texas, from Palo Alto, California.

U.S. stocks rose on Monday, continuing Friday's rally after a softer-than-expected jobs report. This week, there are no major economic reports and earnings reports are slowing. Oil prices are up due to concerns that a new Israeli invasion of Rafah is looming as well as news that Saudi Aramco will raise its crude oil prices to Asia and Europe next month. The Dow is up 0.1%, and S&P 500 0.6% and the Nasdaq rose 0.8%. Crude oil was trading above $78 per barrel and gold rose $24 to $2333 per ounce.

Tesla is a vertically integrated battery electric vehicle automaker and developer of autonomous driving software. The company has multiple vehicles in its fleet, which include luxury and midsize sedans, crossover SUVs, a light truck, and a semi-truck. Tesla also plans to begin selling more affordable vehicles, and a sports car. Global deliveries in 2023 were a little over 1.8 million vehicles. The company also sells batteries for stationary storage for residential and commercial properties including utilities and solar panels and solar roofs for energy generation. Tesla also owns a fast-charging network.