“Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market. The economy will likely continue to grow through the summer and fall, however it will be choppy, Ken Goldstein,” an economist with the Conference Board said.
Although I’m not in the camp that believes a recession is imminent, May’s upbeat reading must be tempered by some of the components that drove the outsized gain.
The largest contributions came from the interest rate spread, consumer expectations, building permits and real money supply.
Interest rate spreads and money supply are extremely intangible, while consumer expectations in May were mixed and housing continues to struggle.
In the meantime, consumer sentiment, as measured by the University of Michigan’s survey, unexpectedly fell from 74.3 in May to 71.8 for the mid-June reading. A survey by Bloomberg had called for 74.5.
Consumers sentiment remains in a downward trend amid weak job creation and elevated jobless claims.
Though prices have receded somewhat, the spike in gasoline prices earlier in the year has also been a negative, while uncertainty in housing is likely playing a role in depressing sentiment.
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