This morning’s macro updates reaffirm the case for cautious optimism on the outlook for the US economy. The revised second-quarter GDP data show that growth was substantially stronger during the April-through-June period: 3.7% vs. the initial 2.3% estimate (seasonally adjusted annual rate). In addition, today’s weekly report on initial jobless claims reveals that this leading indicator for the labor market remains close to multi-decade lows. In short, the latest figures suggest that business cycle risk for the US is still low.
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The only thing worse than crumbling stock prices is a market slide that’s accompanied by a contracting economy. The US has witnessed the former recently, but it’s not obvious that the macro trend is fatally wounded. The outlook for growth remains moderate for the world’s largest economy, which is to say that the trend is more or less unchanged from recent history. As a result, the forecast that the US is slipping into the business-cycle ditch sounds like an emotional reaction to recent market volatility rather than an objective review of the published data to date.
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● A solid gain for US durable goods orders in July
● NY Fed chief says September rate hike is now “less compelling”
● US mortgage applications inched higher last week
● China’s equity market rebounds on Thursday, following Wall Street higher
● Eurozone money supply & private lending growth accelerate in July