• Data released this week helped put a fine point on what economists and investors have been observing throughout 2019 – the U.S. economy is slowing.
  • The Commerce Department reported in its final revision to Q1 GDP this week that consumer spending rose at an annualized rate of just 0.9%, a decline of more than 1.5% from the previous quarter and well below economists’ expectations.1
  • Against this backdrop, the Fed recently shifted away from its patient policy stance and toward an accommodative one.
  • However, the recent collapse in soft economic data, which measures business and consumer sentiment, has perhaps been more notable than the movement in hard economic data, which tracks more-easily defined figures such as retail sales. Hard data has generally been treading water since late 2018.
  • As the chart shows, sentiment readings jumped in November 2016 and remained well above hard data – until recently.1 Clearly, the growing list of economic uncertainties – business spending and hiring, consumer spending, trade tensions and monetary policy, among other factors – has begun to erode business and consumer sentiment. This decline, combined with more mediocre hard data, has the potential to lead to increased market volatility along with a hard economic landing.

1 Bloomberg, as of June 27, 2019.


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