Economic Insights - May 2018

Comments Off on Economic Insights - May 2018
Economic Insights - May 2018 LoadingADD TO FAVORITES

As of April 30th, the U.S. economy had expanded for 106 consecutive months, matching the second-longest expansion on record. The longest is the 120-month expansion from March 1991 to March 2001. And, the Business Briefingsteam expects that in July 2019, the current expansion will become the longest expansion on record.

According to some so-called experts, we should have already experienced two recessions; they base their forecasts on age and duration. Many of these same pundits are the people, once again, forecasting an imminent recession. It makes no sense to us.

The factors most likely to accelerate the end of this cycle are

  1. A perceived trade war between the U.S. and China becoming a real trade war.
  2. The yield curve inverting quickly and sharply.

The factor most likely to extend this cycle is very benign inflation reinforcing itself in 2018 and 2019, tempering the Fed hiking cycle and extending activity further.  That mean this could be the longest cycle on record by some distance when it eventually ends.

Consider the facts.

Business inventories rose 0.6 percent in February with sales 0.4 percent higher, as forecast.  The 0.6 percent January inventory gain was not revised, leaving inventories posting 0.6 percent gains in each of the last three months. In March, year-over-year growth in output hit the highest level since 2012!

Retail sales bounced modestly in response to the tax-related first quarter disposable income surge. Sales gains of 0.6 percent for the headline and 0.2 percent excluding automobiles, after minor revisions.

The Empire State manufacturing index fell 6.7 points to 15.8 in April after jumping 9.4 points to 22.5 in March. That’s really strong compared to a reading of 4.1 a year earlier and it compares well to the 6-month average of 18.3.

Meanwhile, the Philly Fed manufacturing index edged up 0.9 points to 23.2 in April after sliding 3.5 points to 22.3 in March. The index is down from the 28.8 recent high in October 2017, and the two-year peak of 35.5 in May 2017.  Notably, it has held solidly above 20 since November 2016.

March housing starts rebounded 1.9 percent to 1.3 million after falling 3.3 percent to 1.29 million annualized units. January 2018...

To continue reading, become a paid subscriber for full access.
Already a Business Briefings subscriber? Login for full access now.

Subscribe for as low as $135/year

  • Get 12 months of Business Briefings that will impact your business and your life
  • Gain access to the entire Business Briefings Research Library
  • Optional Business Briefings monthly CDs in addition to your On-Line access
  • If you do not like what you see, you can cancel anytime and receive a 100% pro-rata refund