Summary: The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely.
Overall, the main positives from the recent data are in employment, consumption growth and housing:
- Monthly employment gains have averaged more than 200,000 during the past year, with annual growth of 1.7% yoy. Full-time employment is leading.
- Recent compensation growth isthe highest in 7 years: 2.7% yoy in July and 2.6% in September.
- Most measures of demand show 3-4% nominal growth. Real personal consumption growth in August was 2.6%. Retail sales reached a new all-time high in July.
- Housing sales are near a 9 year high. Starts and permits in August remain near their 8 year highs.
- The core inflation rate has remained above 2% since November 2015.
The main negatives are concentrated in the manufacturing sector (which accounts for just 10% of GDP):
- Core durable goods growth fell 3.7% yoy in August. It was weak during the winter of 2015 and it has not rebounded since.
- Industrial production has also been weak, falling -1.1% yoy due to weakness in mining (oil and coal). The manufacturing component fell -0.2% yoy.
