A Quick Assessment of the U.S. Economy

The “U.S. Economy in a Snapshot” presented today by the Federal Reserve Bank of New York reveals a healthy economy, but with some minor warning signals. Highlights of the Fed’s presentation:

  • Real consumer spending rose solidly in May. Real expenditures on durable goods rose strongly, while real nondurable goods expenditures fell modestly. Services expenditures rose moderately.
  • Retail sales were robust in May.
  • Real business equipment spending fell modestly in 2019Q1, as investment continued to weaken from its pace in 2018. New orders of nondefense capital goods excluding aircraft remained below shipments in May, and continue to suggest weak near-term momentum.
  • Existing home sales rose in May, but new home sales fell. Single-family housing starts and permits remained lackluster. A still-strong labor market and lower mortgage rates potentially could provide more support to the housing sector.
  • After being soft in May, payroll growth was robust in June. The unemployment rate and the labor force participation rate ticked up, while the employment-to-population ratio was unchanged. Even with a low unemployment rate, some measures of labor compensation growth have flattened in the past few months.
  • Core PCE inflation stabilized in May and remained below the Fed’s longer-run objective.
  • U.S. equity indices rose over the past month. Implied volatility fell modestly.
  • Oil prices rose over the month