Economic sentiment falls, merging with hard economic data
Business and consumer sentiment is falling in line with “hard” economic data. Get insight into why and what this could mean for investors.
June 28, 2019 | 1 minute read
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.