On Tuesday, remarks made by Chicago Fed President Austin Goolsbee caught my attention as he took on a more cautious tone regarding the economy. He expressed concerns about warning signs indicating a weakening real economy. Over the past year, Goolsbee had been discussing the possibility of a ‘golden path’ or soft landing, but his recent comments suggest he is now more cautious, stating that it is ‘still possible’. Given his dovish stance, it is not surprising that he is one of the first to raise growth worries.
Two charts in particular illustrate the shift in the economy. The first is the Bloomberg US economic surprise index, which measures economic data in relation to consensus expectations. Following the ISM services number falling far short of the consensus, this index hit a nine-year low, indicating that economists may have been too complacent about growth. The second chart is the Atlanta Fed GDPNow tracker for Q2 growth, which shows a significant decrease in growth projections to just 1.5%.
I am closely monitoring further corporate commentary regarding a potential demand slowdown, and also eagerly awaiting the release of the non-farm payrolls report on Friday, as it will serve as a key indicator of the overall health of the economy.