Tuesday, May 28, 2024
Year : 2, Issue: 22
The labor market is softening, housing is stalled out and economic growth is slowing.
For many, the passing of Memorial Day signals the start of summer as people slow down, don casual work clothes, prepare for vacations and the slower pace of the season.
And so it is with the economy, as the labor market weakens ever so slightly, growth softens and markets consolidate their gains. Just how much the economy swoons into summer will start to become evident this week as key readings come in on the housing sector, consumer confidence, first-quarter gross domestic product and inflation.
“Real GDP growth in the first quarter of 2024 will likely be revised lower in the second estimate’s release, reflecting downward revisions to consumer spending,” Comerica Bank economists Bill Adams and Waran Bhahirethan wrote on Tuesday morning. “With the revisions, real GDP growth in the first quarter is expected to be less than half the 3.8% annualized pace of the second half of 2023.”
The shortened week starts on Tuesday with home price data for March, expected to show that prices rose but at a slower pace. The Conference Board’s consumer confidence report for May will also be out, likely to register another decline following three consecutive months of falling numbers.
Friday is a big day in the world of inflation with the release of the Fed’s favored price gauge, the personal consumption price expenditures index. Markets are looking for May’s number to show no change from April, with the overall rate to be 2.7% annually, while the core rate that excludes food and energy costs to remain at 2.8%. Anything other than that will likely move markets.
How much the economy slows this summer could go a long way to revealing whether the predictions of some economists for a recession later this year or early next come to fruition. Recessions are often not declared until well after they have happened, but that does not stop economists from trying to forecast them in advance.
“Economists and equity markets seem to have overcorrected their interpretation of the Fed’s most determined rate-hiking campaign in four decades,” BCA Research wrote in a client note on Monday.
“Two years ago, they were convinced that Fed tightening would precipitate a recession; now they seem to have concluded that it wasn’t such a big deal after all,” the firm said.
Source: US News
