By: Dividend Sensei
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Weekly Economic Data Review
The unpleasent trend of strong soft data, but disappointing hard data continues.
Specifically, we continue to see strong confidence, both among consumers and small businesses. Similarly, new unemployment claims (237,000 last week) remain very low and indicate the strongest labor market since 2006. Meanwhile corporate earnings expectations continue to be strong, providing the market with a catalyst for its seemingly unstoppable drive higher.
That being said, the so called “hard data” meaning actual production figures, points to far a far weaker economy. For example, industrial production was unchained and down from a 1.1% year-over-year increase in April.
Meanwhile retail sales were down 0.3% month over month, which was far below expectations of 0%. Similarly, housing continues to drag on the economy with new housing starts and permits being much weaker than expectations.
And then of course there was the Federal Reserves’s totally expected 25 basis point rate hike, as well as a detailed plan for the unwinding of its $4.5 trillion balance sheet (more on this in a seperate article).
All told this data resulted in both the New York and Atlanda Federal Reserves once again lowering their real time economic growth forecasts for the next quarter.
New York Fed GDP NowCast: 1.9% for Q2 1.5% for Q3 (down from 2.3% and 1.8%, respectively, last week)
Atlanta Fed GDPNow: 2.9% for Q2 (down from 3.0% last week)