With the US macro surprise index having hit 10-month lows - and now among the dirtiest of dirty shirts of world economic regions (thanks to the over-optimistic expectations) - we thought it useful to reflect somewhat stoically on the reality of the macro-economic environment that we are told day after day is doing so well in the US...
[6]
As Barclays notes,
Several indicators point to a slowdown in economic growth in Q2. For example, the manufacturing ISM fell to 49.0 in May, the lowest since the end of the recession in 2009. In addition, despite a solid increase in payrolls (of 175k), the three-month-moving average fell to 155k in May from 208k in April. Growth in aggregate hours worked also eased.
We view these developments as consistent with our forecast for GDP growth to be notably weaker in Q2 than Q1, reflecting an end to a mini-inventory cycle (which saw a large drag on GDP growth from stock accumulation in Q4 but a sizable boost in Q1) and a slower pace of consumer spending growth (as fiscal tightening at the start of the year curtails demand).
The Economic "Recovery"?
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The Consumption "Recovery"?
[8]
The Jobs "Recovery"?
The Housing "Recovery"?
[9]
Do you see the government-credit-sponsored segment of the economy? (hint GREEN!)
Charts: Bloomberg and Barclays