With the S&P 500 up strongly on Friday following the weaker than expected GDP report, investors seem to think that while the economy is slowing, it will do so at “Goldilocks” pace. According to one indicator they may be right.
Below we have updated our Economic Indicator A/D line where we tally the number of economic indicators which come in above and below forecasts. Since April, the most recent peaks and valleys of the chart are much smaller than they typically have been in the past. There are two possible explanations for this. The first, which we think is unlikely, is that economists are doing a better job at predicting the economy. The other possibility is that the economy is neither firing on all cylinders (where economic reports consistently beat forecasts), nor is it making a crash landing (economic reports consistently coming in below forecasts).
