U.S. Outlook: Mixed signals and caution
What are the near-term prospects for the U.S. economy? Is the glass half-full or half-empty? It’s a tough call.
Right now both answers probably are correct. We believe the U.S. economy will grow at around 1.7% annualized in the second quarter.
This is significantly lower than the first quarter’s 3.2% pace, but still slightly above the U.S. economy’s potential growth rate of around 1.6%. Indeed, in many respects, the U.S. economic expansion continues to trundle along, with few signs of abating.
Real consumer spending growth is expected to rebound to a respectable 2.6% annualized this quarter, but we do not see a return to the heady 3% or more consumer spending growth we saw in the middle of last year (after the Tax Cuts and Jobs Act was passed.)
Moreover, obstacles to consumer spending look like they will only increase from here and spending growth is expected to dip below 2% by 2020.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on May 17.Key observations:
• Regional manufacturing data for May show a decent improvement, and initial jobless claims fell to a one-month low this week.
• The U.S. economic future depends on how U.S. consumers deal with the increased uncertainty of the China trade war.
• Real consumer spending growth is expected to rebound in the second quarter, but we do not see a return to the heady 3% or more consumer spending growth we saw in the middle of last year (shortly after the Tax Cuts and Jobs Act was passed).
Read my full report.