The headlines tell only part of the employment story. To wit, the economy lost 33,000 jobs last month—the first monthly decline in seven years. On the face of it, that would portend an ill wind blowing in for investors.
The second-half economy may not be as strong as we had expected. To wit, after a reassuring 3.0% rise in GDP in the April-to-June period and encouraging early third-quarter metrics, the nation had seemed positioned for a similarly impressive final six months.
The nation will soon enter the homestretch of 2017 facing some unexpected headwinds. To wit, the economy, which stumbled out of the gate during the seasonally slow first quarter, before perking up in the second three months (when the U.S.
Wall Street’s focus has shifted away from the economy to a degree. In part, this evolving emphasis is due to the calendar, as data on manufacturing, employment, homebuilding, and producer and consumer prices are already in the books for this month, although reports on consumer confidence, the gross domestic product, and durable goods orders still are a
The widely expected second-quarter economic comeback arrived on schedule, as a report issued late last month showed that the nation’s gross domestic product had increased by 2.6% in the second quarter, up from a listless 1.2% pace tallied in the first three months.
The economic fundamentals remain largely supportive. On point, the past few weeks have seen notable recoveries in housing starts and building permits (up 8.3% and 7.4%, respectively, in June), reassuring stability in new and existing home sales, a solid upswing in consumer confidence, and a better-than-expected 0.6% increase in the leading economic indicators
The good news is coming on several fronts as the third quarter proceeds. First, the Institute for Supply Management reported a jump in manufacturing in June, boosted by a surge in new orders. Then, that trade group issued data showing a pickup in non-manufacturing, led, as well, by strengthening orders.
The third quarter is likely to begin in much the same way that the second three months ended. That is, we expect some reports to show increasing economic strength, while others suggest the economy is proceeding less smoothly.
The long-running economic expansion continues to have its share of ups and downs. Importantly, though, the good times have not been sufficiently strong to alter the understated character of the expansion, while the soft patches have not been serious enough to put the advance in jeopardy.
The long expansion is showing signs of strain. True, we aren’t facing the headwinds that limited growth to 1.2% in the first quarter. However, manufacturing, retailing, and job growth again are seeing choppiness after appearing to hit their stride earlier.