Second quarter economic activity was chosen for the United States, based on the median estimate via multiple sources compiled by CapitalSpectator.com. The firmer nowcast offers fresh support for expecting the US economy to extend a moderate expansion into the second quarter in the official quarterly report due out later this month.
Growth is expected to increase by 1.9% (seasonally adjusted annual rate of GDP) for the April-June period, according to the median nowcast. The projection is slightly lower than the Up 2.0% in Q1. The Bureau of Economic Analysis will release its initial GDP estimate for the second quarter on July 27.
Today’s revised second quarter nowcast for a 1.9% rise marks a substantial improvement over the previous median estimate of 1.3% published on June 20.
Some analysts have raised economic expectations recently. Ed Yardeni, who runs the eponymous site Yardeni.com, recount CNBC that the U.S. economy has shifted from a “continuing recession” to a “continuing recovery.” He adds that headwinds are building for the housing sector. “Obviously there’s going to be a recession in commercial real estate over the next two years. But I don’t think that sector is big enough to bring down the economy.
However, some economists continue to see trouble brewing, noting that the manufacturing sector is contracting and that the recent rise in interest rates, which is expected to continue, will soon tip the economy into recession.
Key counterpoints to recession forecasts: Consumers continue to spend while businesses continue to hire more workers. Personal consumption expenditure rose for a fifth consecutive month in June, albeit at a slow pace. However, the year-over-year spending trend remains relatively stable at over 6%.
US payrolls rose by 339,000 in May, a four-month high. Friday’s labor market update for June is expected to show a weaker gain of 213,000, according to Econoday.com’s consensus forecast, but if accurate it will be high enough to reaffirm that hiring remains strong enough to keep the economy growing.
There are various risks that could create problems for the economy later in the year. But for the moment, there is little chance that a defined by the NBER recession has started or is imminent. Barring an epic slump in the numbers ahead for June, the US expansion is likely to persist.
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