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Job Openings Hitting 3-Year Lows the Canary in the Coalmine for US Economy?

Published 06/07/2024, 07:54 AM

Recent economic estimates suggest US growth has slowed compared with previous estimates, but today’s revised GDP nowcast for the second quarter still points to a modest pickup in output over Q1.

The median estimate for a set of projections compiled by CapitalSpectator.com indicates output rising 1.9% in Q2. If accurate, growth will strengthen, albeit modestly, relative to Q1’s sluggish 1.3% rise.US Real GDP Change

Today’s median nowcast marks a slight downgrade from the previous update on May 31, when Q2 growth was projected to rise 2.0%.

Some economists advise that consumers have turned cautious on spending, which may be a warning sign for the economy.

Bank of America CEO Brian Moynihan reports that the growth rate of spending has slowed, based on credit cards data. The 3.5% rise this year marks a sharp deceleration from the comparable 10% growth rate for the year-earlier pace, he notes.

“We’ve got to keep the consumer in the game in the U.S. economy, because they’re such a big part of it,” Moynihan tells CNBC. “They’re getting a little more tenuous, and that is due to everything going on around them.”

Yet new survey data for May paint a brighter profile, based on the US Composite PMI, a GDP proxy. This index points to the fastest growth rate in more than two years.Composite Output Index vs GDP

The bond market, however, seems to be pricing in softer growth lately. The 10-year Treasury yield has dropped sharply in recent days.

One factor weighing on yields: this week’s news that US job openings fell to the lowest level in over three years – a possible early warning of softer economic conditions ahead.

Overall, the case for expecting a sharp acceleration in output in Q2 has faded–a scenario that looked more likely a few weeks ago.

On the other hand, the current nowcast suggests that while growth isn’t taking off again, the path ahead still appears set to deliver a modest if unimpressive improvement vs. Q1.

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