Zero Percent Growth

The US economy is continuing to slow down, as is job growth. Looking ahead, that’s a trend that’s expected to continue: The consensus is expecting essentially 0% growth in GDP and earnings over the next three quarters. In other words, the consensus is saying that in the next nine months, we will see no real growth in consumer spending, capex spending, or hiring. Nonfarm payrolls could be a bit higher than zero because of demographics, including immigration, but with the consensus expectation of negative growth in the third quarter, we could soon start to see nonfarm payrolls come in around -100K to -200K. In the week ahead, headline CPI inflation is expected to come in at 5.2% in March – a notable decline from 6% in February – but still far above the Federal Reserve’s 2% target. While inflation is certainly treading in the right direction, at this point it’s likely too early for the Fed to turn dovish.

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