Home sales on course to fall back in Q2.
Oliver Allen (Senior US Economist)US
Net trade and equipment investment both set to drag on Q2 growth.
Oliver Allen (Senior US Economist)US
Probably depressed marginally by Juneteenth; the trend remains upwards.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
New home sales likely to remain subdued.
Oliver Allen (Senior US Economist)US
- We’re are lowering our Q2 GDP forecast to 1.0%, from 1.5%, due to May’s poor trade and orders data.
- We estimate that the core PCE deflator rose by just 0.11% in May; a run of sluggish increases beckons.
- Real consumption likely rose by 0.3% in May, with growth of less than 2% looking likely for this quarter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Consistent with slowing consumption growth and a gently rising unemployment rate.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We look for a small dip in initial claims to 235K, due to Juneteenth, but the trend still is rising.
- May’s durable goods orders likely will point to a big drag on Q2 GDP growth from equipment investment.
- Net trade also looks set to weight heavily on Q2 growth, even if the goods trade deficit narrowed slightly in May.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
THE SLOWDOWN IS REAL, AND WILL PERSIST…
- …THE FED IS RUNNING THE RISK OF DELAYING TOO LONG
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The latest services surveys point to lower underlying inflation and a further slowdown in wage growth.
- New home sales probably dipped in May, reflecting the rise in mortgage rates since the start of the year.
- Conference Board confidence data signal slower spending growth and rising unemployment.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Shipping costs have rocketed, but they likely will add less than 0.1pp to core PCE inflation next year.
- The spike in shipping costs probably will unwind after tariff-related risks have abated.
- Consumer confidence likely dropped in June, with adverse implications for consumption growth.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
New mortgage rates still far too high for transactions to recover
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Stocks will like Fed easing, but will be less enamored of a potentially steep drop in gross margins.
- Existing home sales fell a bit further in May and a sustained recovery looks a long way off.
- The pick-up in the employment index of S&P Global PMI survey in June is probably a red herring.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Residential investment likely to plunge in Q2.
Oliver Allen (Senior US Economist)US
A gradual recovery is taking hold, but manufacturing is too small to alter the bigger picture.
Samuel TombsUS
- Falling hirings and rising firings are a toxic combination; job growth looks set to slow sharply.
- May building permits suggest residential construction spending is falling at a 10% annualized pace.
- Existing home sales likely were unchanged in May; Fed rate cuts will facilitate only a sluggish recovery.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Rent rises for new tenants have slowed sharply; the feared catch-up in CPI rent inflation is unlikely.
- We expect annualized CPI housing inflation to slow to 3-to-4% over the next few quarters.
- Q2 consumption is on course for a modest 2%, similar to Q1, after May's lacklustre retail sales data.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Inflation pressures reassuringly absent, given the surge in shipping costs.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
