U.S. Economy in Growth Slowing Phase of Cycle
The economy saw a boost in real GDP growth during the second quarter, driven largely by an increase in business investment. While consumer spending did moderate somewhat, it still maintained a solid pace overall. Additionally, there were some indications that residential investment may be starting to stabilize. Despite the tight labor market, inflation actually fell during this time period.
OVERALL CYCLE
Growth Slowing
Real GDP growth picked up in Q2, led by stronger business investment. Consumer spending moderated, but to a still solid pace. Residential investment showed signs of stabilization. Inflation fell, even as the labor market remained tight.
POSITIVES
- Capex benefitting from investments in transportation and factories.
- Payrolls growing. Unemployment rate near cycle low.
- Falling inflation, real income growth, and excess savings support consumer sentiment and spending.
NEGATIVES
- Fed still hiking rates, raising the cost of credit.
- Tighter bank lending standards reducing credit availability.
- Slower global growth and inventory overhang weighing on demand and profits.
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