Augustine (Gus) Faucher is senior vice president and chief economist of The PNC Financial Services Group, serving as the principal spokesperson on all economic issues for PNC.

Prior to joining PNC as senior macroeconomist in December 2011, Faucher worked for 10 years at Moody’s Analytics (formerly, where he was a director and senior economist. He was responsible for running the firm’s computer model of the U.S. economy, edited a monthly publication on the U.S. economic outlook, covered fiscal and monetary policy, and analyzed various regional economies. Previously, he worked for six years at the U.S. Treasury Department, and taught at the University of Illinois at Urbana-Champaign. He was named senior vice president in March 2015, deputy chief economist in February 2016, and to his current role in April 2017.

Faucher is frequently cited in international, national, and regional media outlets including The Wall Street Journal and The New York Times. He has appeared on ABC World News, CBS Evening News, NBC Nightly News and Nightly Business Report, and is regularly featured on CNBC, CNN and Fox Business. In addition, he appears regularly on CBS Radio, NPR and Marketplace.


Webcast Transcript:

Hi, this is Gus Faucher, Chief Economist for the PNC Financial Services Group with an Economic Outlook for the second quarter of 2024. The U.S. economy is very strong in early 2024. According to the results from PNC's latest Small Business Survey, small business owners are the most optimistic they have been in the more than 20 year history of the survey.

They're feeling very optimistic about their own company's prospects, about their local economy and about the national economy and investors are also feeling very good. We've seen a strong increase in the stock market in early 2024 and stock market volatility is back to where it was before the pandemic.

The labor market is also historically strong. We've continued to add jobs at a very rapid pace over the past couple of years, and the unemployment rate has been below 4 percent for more than two straight years. The first time that has happened since the late 1960s. The overall economy has recovered very well from the pandemic.

After a steep contraction in economic activity in the first half of 2020 with the pandemic, we've seen a strong economic expansion since then, and the U. S. economy is about 7 percent larger adjusted for inflation than it was before the pandemic. That being said, there have been big shifts in economic activity since the pandemic.

In the initial stages of the recovery from the pandemic, there was very strong spending by consumers on goods. More recently, we've seen stronger growth in consumer spending on services, although it is still lagging behind goods spending. Business fixed investment has been strong since the pandemic, as businesses have been spending on capital equipment in order to make their existing workforces more productive.

We did see a very strong recovery in household spending on residential investment; things like home building and repairs and renovations. Then there was a contraction with higher mortgage rates. But more recently, we have seen an uptick in housing investment. The key to the entire recovery has been after tax personal income, the red line. This is adjusted for inflation.

Stimulus payments helped support consumer spending when the labor market was weak. Then we saw a drop off in household income with the expiration of stimulus payments. But more recently, with strong job growth and good wage growth and slowing inflation, we've seen after tax incomes increasing, which has been able to support consumer spending, which makes up about two thirds of the U. S. economy.

We continue to see high inflation in the U.S. economy. In the early stages of the recovery from the pandemic, the inflation was coming from the goods side of the economy, as households spending on goods surged. More recently, however, the inflation has been coming more from the services side of the economy.

We've seen strong housing inflation, and then strong wage growth has led to high services inflation as well. That being said, we do expect that services inflation will gradually slow throughout 2024 and into 2025, and that will allow the Federal Reserve to slowly cut interest rates over the next couple of years, supporting continued economic growth in 2024 and 2025.

The biggest reason for optimism about the economy in 2024 remains the labor market. The labor force participation rate, the share of adults who are working or looking for work, is structurally lower now than it was before the pandemic, and that means that businesses will be reluctant to lay workers off.

Demand for workers remains strong and with a shortage of available workers, businesses will want to hold on to their workers. And that means continued solid job growth and continued solid wage growth. With all of that, that means that although economic growth will slow somewhat in 2024, relative to a very good 2023, the economy will continue to expand.

And then expected interest rate cuts from the Federal Reserve later this year will support economic growth at the end of 2024 and into 2025. We will see a bit of a slowing in job growth over the next year or so. And the unemployment rate, which remains historically low, will increase to a bit above 4 percent by the end of this year.

But the labor market will remain very solid, and that will continue to support consumer spending gains over the next couple of years.

Thank you very much for your time. You can find all of our materials at And you can follow me on X, formerly Twitter, at GusFaucherPNC.