August 19, 2019 — Mixed Signals


Bond market sent out a scare last week as 10-year treasuries fell below 2-year yields for the first time since 2007 – is this a precursor to a recession?

Industrial output has fallen off in July due to trade issues.  Disappointing data from Germany and China has sparked global growth fears. 

On Friday, it was reported the consumer confidence index fell to a 7-month low. This is worrisome as the US consumer has been keeping the economy rolling, in defiance to the global economic slowdown. The robust job market is showing signs of slowdown, as is the growth in paychecks.  The effects from Trump tax cuts last year are fading as people adjusting to new normal. 

On the other hand, retail sales data released Thursday showed consumer spending continues to support US economic growth.  Inflation is a non-issue, interest rates are low, and earnings are growing moderately.  If a recession is on the horizon, it is hoped it will not be as deep, or as long.