- A defining characteristic of the current economic recovery is how easily a slow-growing economy can be knocked off stride by even small and fleeting disturbances, writes Jon Hilsenrath. Or as Larry Summers puts it, an economy growing at a slow rate "is one moderate-sized shock away from recession."
- While few believe the U.S. to be near recession - initial jobless claims are near a 15-year low, after all - the Fed is puzzled by the lame growth in consumer spending even as incomes and wealth rise. It's likely put a June rate hike off the table, and futures markets have pretty much priced out one in September as well.
- If Q1 GDP growth of 0.2% gets revised into negative territory (as many expect), it will be the 3rd time this expansion the economy contracted over a quarter. In the three expansions of the Great Moderation - between the mid-1980s and mid-2000s - there was never a quarterly contraction.
- Adding to the puzzle, says Hilsenrath, is each contraction occurred in Q1 - suggesting to some an issue with the government's seasonal adjustments. A Fed study released this week, however, finds "no firm evidence" of such a problem.
- Previously: Treasurys rally as consumer sentiment dives (May 15)