The overall risk of the economy remains relatively low, as such indicators as unemployment, GDP, and inflation remain at healthy levels. However, some indicators such as treasury spreads, industrial production, corporate profits, and CFNAI indicate things could be slowing down.
Comments on this week’s report:
- The yield curve remains relatively flat as the 10-year minus 2-year spread sits at 0.25% while the 10-year minus 3-month is inverted at -0.14%, indicating a moderate to high level of risk.
- Job growth, as measured by total nonfarm payrolls, slowed down as its year-over-year growth rate dropped from 1.71% to 1.58%, however it still indicates a low level of risk. Meanwhile the unemployment rate remains near all-time lows at 3.6%.
- The core Consumer Price Index (CPI), a measure of retail inflation, dropped from 2.06% to 1.99% yet still remains comfortably near 2.0% and shows no sign of risk.
- The University of Michigan Consumer Sentiment Index has been trending lower over the past year but still remains relatively high and shows no immediate sign of risk.
- Corporate profits are slowing as its year-over-year growth rate sits at a relatively low 1.64%. Should growth in corporate profits continue to slow, a moderate or high level of risk may be warranted.