Building Permits: Sustained Recovery
Building permits, stock prices and a drop in jobless claims were significant positive contributors to the leading indicators index. The gain in building permits was especially reassuring as that suggests the housing market is in recovery mode. Manufacturer’s new orders were up, suggesting that business investment will also contribute to growth going forward, although at a modest pace compared to prior years.
Consumer Expectations: The Dark Side
Consumer expectations are the dark side of this report and support the view that consumer spending will be a subpar contributor to the growth outlook. The moderation of the leading indicators is consistent with the mid-cycle behavior of prior cycles (1997-1998, 2004-2006) and continued growth for now. Yet, the trajectory of the decline continues to concern us and so we get slow growth, but no boom.