Despite the fair amount of listed indicators signaling a moderate level of risk, the overall risk of the economy remains relatively low as GDP continues to grow at a strong pace, unemployment remains low, and inflation remains near 2.00%. However, treasury spreads remain historically very narrow and the CFNAI three-month average remains below zero, which warrants come caution.
Comments on this week’s report:
- Treasury spreads remain historically very narrow as the 10-year minus 2-year spread and the 10-year minus 3-month spread sit at 0.21% and 0.11%, respectively.
- GDP growth continues to grow at a relatively strong pace as it year-over-year growth rate increases from 2.97% to 3.21%.
- Core Personal Consumption Expenditures (PCE), a measure of inflation, slowed as its annual growth rate dropped from 1.68% to 1.55% and now indicates a moderate level of risk.
- New orders of durable goods was little changed and remains at a low level of risk as its year-over-year rate drops from 2.32% to 2.28%.
- The University of Michigan’s Consumer Sentiment index increased from 93.80 to 98.40 and now indicates a low level of risk.