The big picture is the risk that growth may well have peaked in the current cycle:
And personal consumption expenditure flows (population adjusted) have arced in a worrying sign of secular decline for some time:
GDP growth less private employment growth has been negative since Q4 2010, one of the very few such periods in the post war period and the weakest to date and symptomatic of weak productivity and wage growth:
Preliminary US GDP grew by a real $22bn in the first quarter. Given that we are unlikely to see the weather related bounce back in growth that we saw last year, we are left wondering where growth is going to come from in the second and third quarters, especially if global trade fundamentals remain weak.
There are some interesting patterns and trends in US data: so I do ask myself, are we at the peak of the current cycle, are we as far as debt and low interest rates can take us?
US income growth has long been acknowledged to have weakened considerably yet recent data shows that the trend has indeed been weaker than first thought. Note the following chart showing pre and post revisions to chained per capita personal disposable income:
The US economy lies somewhere between boom and bust as shown by the following graphical representation of real GDP growth. Nevertheless, there are aspects of US economic growth that have boom type characteristics/risks; these are found primarily in the significant increases in auto focussed consumer credit and automotive production/capacity
Short term data has varied wildly of late; such can often obscure the underlying trend: what if we adjust for inventories and changes in consumer credit? Well we see less noise for one, but we also see a slower underlying growth profile – yes, credit creation is part and parcel of growing expenditure but I still feel we are in a high debt/deleveraging and weak income growth dynamic that needs to be especially sensitive to growth in credit/debt.
In a recent post on employment and Q3 US GDP, I made the point that inventories could be impacting employment data. Inventories are also likely impacting PMIs (new orders, employment, production components) and other data points, so I would be wary of reading too much into recent data.