March Macro Update: Recession Risk Remains Remote

by Urban Carmel
Financial Sense

Summary: The macro data from the past month continues to point to positive but sluggish growth. On balance, the evidence suggests the imminent onset of a recession is unlikely.

The main positives are in employment, consumption growth and housing:

  • Employment growth is close to the best since the 1990s, with an average monthly gain of 222,000 during the past year. Full-time employment is soaring.
  • Recent compensation growth is the highest in more than six years: 2.7% in December, dropping to 2.2% yoy in February.
  • Most measures of demand show 3-4% nominal growth. Real personal consumption growth in January was 2.9%.
  • New housing sales, starts, and permits remain near an eight-year high.
  • The core inflation rate ticked up above 2% and to the highest rate since May 2012.

The main negatives are concentrated in the manufacturing sector (which accounts for just 10% of GDP):

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