US economic growth remained “above trend” in May, according to this morning’s update of the Chicago Fed National Activity Index, a weighted average of 85 indicators. For the third consecutive month, the three-month average of the index (CFNAI-MA3) posted a reading above zero. This business cycle benchmark decreased modestly to +0.18 from a revised estimate of +0.31 for April, although the decline still leaves CFNAI-MA3 well above the neutral mark. As a result, recession risk remained low as of May.
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US economic growth for this year’s second quarter is widely expected to rebound sharply after a 1.0% decline in Q1. The upbeat estimates for this quarter include the Capital Spectator’s median econometric nowcast, which anticipates that GDP will increase 3.3% during the April-through-June period (real seasonally adjusted annual rate). That’s up from 2.8% in the previous Q2 nowcast. The Capital Spectator’s final estimate for this quarter will be published shortly ahead of the government’s initial Q2 GDP report, which will be published on July 30 by the US Bureau of Economic Analysis (BEA).
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