Goolsby
On Tuesday, comments from Chicago Fed President Austin Goolsby caught my attention, as he sounded a more cautious tone on the economy, saying there are “several warning signs that the real economy is weakening.”
He also spoke for the past year about the possibility of a “golden road” or soft landing, but now he struck a more cautious tone, saying that was “still a possibility.”
Goolsbee is a dovish economist, so it’s no surprise that he was one of the first to point out concerns about growth, but here are two charts that highlight the changes in the economy.
1) Bloomberg U.S. Economic Surprise Index
Bloomberg and Citi have similar indices that measure economic data against consensus expectations. The ISM services index on Wednesday came in well below consensus expectations, and the index fell to its lowest level in nine years, suggesting economists are too optimistic about growth.
2) Atlanta Fed GDPNow
A second chart showing the same picture is the latest update on second-quarter growth from the Atlanta Fed’s GDPNow tracker. The quarter is over, and we’re three weeks away from the first GDP release. In just two weeks, the index has fallen by half to 1.5%.
I will be watching business commentary on slowing demand closely and, of course, Friday’s nonfarm payrolls report will be a key indicator of the health of the economy.
