Macro Conditions at a Glance

Growth is slowing, and earnings are expected to take a hit.
For now, the labor market remains resilient.

2025Q1 GDP estimate is expected to be -3.7% (-1.4% gold-adjusted)
Core PCE is at 2.8% yoy and still above the Fed's 2% target.
Manufacturing PMI is in contraction, while Services PMI is in expansion.

Three cuts are expected for 2025.

Chart of the Quarter - GDPnow Forecast

Q2 is expected to see a huge rebound in growth,
due to the statistical correction in the trade deficit.

As of June 02, 2025, Q2 estimate = 4.6%.

Lagging Indicators

The Unemployment Rate is now stabilizing at 4.0%.

The Sahm Rule indicator was triggered in July after crossing 0.5, but has since come down.

The number of job openings is now 7.6 mil, a low level since 2021.

Real GDP Growth in 2024 was robust.

2024Q4: 2.4%
2025Q1: -0.2%

2025Q1: 4.6% (est.)

Core PCE has gone sideways and is still meaningfully above the Fed's 2% target.

Service Inflation continues to come down gradually.

Corporate profit and margin rebounded in 2024.

Leading Indicators

3m-10y Term Spread turned back to negative.

Initial Claims slightly declined. Continued Claims were flat.

Housing starts recovered slightly.

Average Weekly Hours declined sharply.

Retail Sales indicates that consumers are still-resilient even though sentiment is dimmed.

University of Michigan Consumer Sentiment dipped.

The Manufacturing PMI continues to contract in May.
The Services PMI declined in May, with new orders plunging and prices increasing.

Volatility stayed low despite uncertainties.

Investor Sentiment declined sharply.

Fed Rate Path