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Economic Briefing Report

The U.S. economy is showing a relatively higher level of risk as the CFNAI three-month average continues to trend away from zero, treasury spreads remain historically very narrow, and industrial production growth slows significantly.  However, the overall economy is not showing any immediate sign of a recession as GDP continues to grow at a strong rate, inflation remains near a sustainable 2.00%, and unemployment sits near all-time lows.

Comments on this week’s report:

  • Treasury spreads remain historically very narrow as the 10-year minus 2-year sits at 0.21% and the 10-year minus 3-month spread at -0.1%.
  • The Chicago Fed National Activity Index (CFNAI) 3-month moving average remains below zero for the third consecutive month as is drops from -0.24 to -0.32, indicating a moderate level of risk.
  • Industrial Production growth indicates a high level of risk as its year-over-year rate drops from 2.32% to 0.89%.
  • Growth in housing still indicates a moderate level of risk despite its year-over-year rate increasing from -12.13% to -2.53% as it still remains below 0.00%.
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Economic Briefing Report

Despite a slight increase in the number of economic indicators going from a “low” level of risk to a “moderate” level of risk, the overall economy continues to look healthy as GDP grows at a year-over-year rate of 3.21%, inflation remains near 2.00%, and unemployment remains near all-time lows.

Comments on this week’s report:

  • Treasury spreads narrow further as the 10-year minus 2-year spread drops from 0.22% to 0.19% and the 10-year minus 3-month spread drops from 0.09% to 0.04%.
  • The core Consumer Price Index (CPI), a measure of inflation, remains comfortably near 2.00% as it increased from 2.04% to 2.06%.
  • The year-over-year growth in the number of business loans issued dropped from 10.01% to 7.50% but still shows a low level of risk as its growth remains historically high.
  • The St. Louis Fed Financial Stress Index remains near all-time lows as it dropped from -1.34 to -1.35 (any reading below zero indicates low levels of financial stress).
Please Note: Due to various factors, including changing market conditions, this content may no longer be reflective of current opinions or positions. This report is for informational purposes only and should not be regarded as a substitute for independent research and personalized investment advice.

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Economic Briefing Report

The overall risk of the U.S. economy to experience a recession remains relatively low as jobs growth picks up, and GDP and inflation continue to grow at sustainable rates.  However, historically narrow treasury spreads and the Chicago Fed National Activity Index (CFNAI) three-month average below zero warrants some vigilance.

Comments on this week’s report:

  • Treasury spreads were little changed and remain historically very narrow as the 10-year minus 2-year spread and the 10-year minus 3-month spread sit at 0.22% and 0.09%, respectively.
  • Job growth continues to grow at a strong rate as the U.S. added 263,000 jobs in April and increased its year-over-year change from 1.72% to 1.76%.
  • As a result of the increase in jobs and virtually unchanged labor force participation rate, the unemployment rate dropped from 3.80% to 3.60%.
  • Wage growth, as measured by the change in average hourly earnings, continues to grow at a sustainable rate as its year-over-year growth increases from 3.33% to 3.37%.
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Economic Briefing Report

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.
Please Note: Due to various factors, including changing market conditions, this content may no longer be reflective of current opinions or positions. This report is for informational purposes only and should not be regarded as a substitute for independent research and personalized investment advice.

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Economic Briefing Report

The overall risk of the economy remains moderately higher than it has in the more recent past, but still shows a relatively low amount of risk.  Despite most of the listed indicators showing a “moderate” or “low” level of risk, some vigilance is warranted as the yield curve remains relatively flat and CFNAI remains below zero.

Comments on this week’s report:

  • Treasury spreads remain historically very narrow as the 10-year minus 2-year spread and 10-year minus 3-month spread sit at 0.18% and 0.15%, respectively.
  • Housing starts continue to fall as its year-over-year rate of change dropped from -11.47% to -14.17%, and shows a moderate level of risk.  Should housing starts continue this trend, a high level of risk may be warranted and thereby should be more closely monitored.
  • Growth in total business inventories dropped slightly as its year-over-year change fell from 5.21% to 4.92%, but still shows a low level of risk.
  • The St. Louis Fed Financial Stress Index continues to trend lower as it drops from -1.27 to -1.31 as it nears all-time lows and shows virtually no level of risk.
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Economic Briefing Report

Treasury spreads remain historically very narrow, inflation is growing at a sustainable rate, unemployment is near all-time lows, and the CFNAI 3-month moving average is below zero.  With this in mind, the economy appears to be at a moderately-low level of risk of going into a recession.

Comments on this week’s report:

  • Treasury spreads were little changed with the 10-year minus 2-year dropping one basis point to 0.16% and the 10-year minus 3-month widened by two basis points to 0.09%.  Spreads still remain historically very narrow.
  • The core Consumer Price Index (CPI), a measure of inflation, also saw little change in its year-over-year growth as it dropped from 2.08% to 2.04% and remains comfortably near 2.00%.
  • Industrial production growth dropped as its year-over-year rate fell from 3.47% to 2.77%, yet it still shows a low level of risk as it continues to grow at a fairly sustainable rate.
  • Growth in the amount of commercial business loans saw a moderate decrease as its year-over-year rate dropped from 10.33% to 10.01% and still shows no sign of high or moderate risk.
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Economic Briefing Report

The overall risk of the economy remains relatively moderate as treasury spreads remain historically narrow and the CFNAI 3-month average sits below zero.  However, highlighting this week’s report were a better than expected increase in jobs and a lower than expected decrease in durable goods orders.

Comments on this week’s report:

  • After the 10-year minus 3-month treasury spread inverted last week, spreads widened this week with the 10-year minus 2-year increasing to 0.18% and the 10-year minus 3-month increasing to 0.07%. Despite the increase in the spreads, the treasury yield curve still remains relatively flat.
  • The U.S. added 196,000 jobs in March yet its year-over-year growth only increased from 1.70% to 1.71%. Meanwhile the unemployment rate holds steady at 3.80%. Both indicate a low level of risk.
  • Wage growth, as measured by average hourly earnings, recognized a drop in its year-over-year growth rate as it decreases from 3.48% to 3.33%. However, wage growth still indicates a low level of risk.
  • Durable goods orders dropped 1.6% in February and reduced its year-over-year growth from 8.13% to 1.81%. Despite the relatively large drop in durable goods orders year-over-year rate, the index tends to be somewhat volatile and still indicates a low level of risk.
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Economic Briefing Report

The overall risk of the economy is moderately higher than it has been more recently as the CFNAI three-month average remains below zero and the spread between the 10-year treasury and the 3-month treasury inverts for the first time since 2007 (i.e. before the housing market crash).

Comments on this week’s report:

  • Treasury yield spreads remain historically narrow with the 10-year minus 2-year spread sitting at 0.16%.  Meanwhile the spread between the 10-year minus 3-month inverted for the first time since 2007 as it dropped from 0.08% to -0.03%.
  • The University of Michigan’s Consumer Sentiment Index remains historically high however it has dropped 5.92% over the trailing twelve months, indicating a moderate level of risk.
  • Corporate profits have increased at a year-over-year rate of 11.15%, up from 6.15% the month prior and continues to show no sign of risk.
  • Housing starts struggle to gain traction as its year-over-year growth rate dropped from -4.57% to -9.92%, marking its fifth consecutive month of negative year-over-year growth.
  • The core Personal Consumption Expenditure (PCE) price index, a measure of inflation, recognized a reduction in its year-over-year growth rate, dropping from 1.95% to 1.79%.  However, the index still indicates a low level of risk.
Please Note: Due to various factors, including changing market conditions, this content may no longer be reflective of current opinions or positions. This report is for informational purposes only and should not be regarded as a substitute for independent research and personalized investment advice.

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Economic Briefing Report

The overall risk of the economy is moderately higher than it has more recently been as the treasury yield curve continues to flatten and the CFNAI three-month average drops below zero.  However,  GDP growth, industrial production growth, and rates of inflation continue to grow at sustainable rates.

Comments on this week’s report:

  • Treasury yield spreads narrowed as the 10-year minus 2-year spread dropped to 0.14% and the 10-year minus 3-month spread dropped to 0.11%.
  • The Chicago Fed National Activity Index (CFNAI) three-month moving average dropped from 0.00 to -0.18 as four of the five CFNAI’s composite indexes dropped below zero, raising its level of risk to “Moderate”.
  • The St. Louis Financial Stress Index inched slightly lower and remains near all-time lows as it dropped from -1.22 to -1.26, indicating no sign of financial stress and a low level of risk.
Please Note: Due to various factors, including changing market conditions, this content may no longer be reflective of current opinions or positions. This report is for informational purposes only and should not be regarded as a substitute for independent research and personalized investment advice.

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Economic Briefing Report

The overall risk of the economy remains relatively low as most of the more prominent indicators listed show a low level of risk.  However,  a slowdown in recent jobs growth and a slight increase in the number of economic indicators that have a moderate level of risk warrants some attention.

Comments on this week’s report:

  • Treasury yield spreads widened but still remain historically narrow and flat as both the 10-year minus 2-year spread and 10-year minus 3-month spread sit at 0.17%.
  • Industrial production growth slowed slightly as its year-over-year growth rate decreased from 3.86% to 3.54%, but still shows no sign of economic risk.
  • The amount of commercial business loans issued continues to rise as its year-over-year growth rate increased from 4.71% to 4.84%.
  • The core Consumer Price Index (CPI), a measure of inflation, saw a slight decrease in its 12-month growth rate as it dropped form 2.15% to 2.18%, but still remains comfortably near 2.00%.
  • Year-over-year growth in new orders of durable goods jumped from 3.46% to 8.39% and still shows a low level of risk.
Please Note: Due to various factors, including changing market conditions, this content may no longer be reflective of current opinions or positions. This report is for informational purposes only and should not be regarded as a substitute for independent research and personalized investment advice.

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