The most significant data point change in April is the PMIs. Both Manufacturing PMI and Services PMI slide into contraction. The fact that this is the first time they agree in a long time is also alarming.
On the bright side, Services PMI contraction could help to ease services inflation. Q1 GDP growth came below expectations. Q2 GDP growth estimate is 3.3%. The Sahm Rule indicator rose to 0.37. A level of 0.5 is a recession signal.
Lagging Indicators
Unemployment Rate rose to 3.9% in April.
The Sahm Rule indicator rose to 0.37, so we bring back the chart.
A reading above 0.5 would indicate recession in real time.
Real GDP Growth has been very strong despite the Fed's rate hikes.
2023Q4: 3.4%
2024Q1: 1.6%
2024Q2: 3.3% (est.)
Wage Growth and Service Inflation start to show divergence, with the latter turning back up and the former continuing to decline.
Corporate Profit picks up. (as of 2023Q4)
Leading Indicators
Term Spread - the yield curve is still deeply inverted.
Initial Claims remain at historically low levels.
Housing starts are at the historical average.
Average Weekly Hours currently is not showing a trend.
Year over year Retail Sales change is at 3.9%, around the historical average.
University of Michigan Consumer Sentiment improves.
Purchasing Managers' Index (PMI)
Manufacturing PMI and Services PMI both declined to the expansion territory.
This is the first time in two years that they agree, and not a positive sign.
The Stock Market took a breather amid rate uncertainty and high valuations.
Investor Sentiment saw a quick decline, and has since recovered slightly.
Fed Rate Path
The first rate cut is now expected in September, and it will be only 25bp.