Daily Briefing
The latest GDP figures suggest continued moderate expansion, with the economy growing at an annualized rate of +2.4% in the most recent quarter. This marks the fifth consecutive quarter of positive growth, defying earlier forecasts of a slowdown tied to tightening monetary policy.
Consumer spending remains the primary engine, accounting for 68.2% of GDP growth. Retail sales have been buoyed by a resilient labor market and moderating inflation expectations. However, business investment has contracted for the second straight quarter, declining by -1.3% as higher borrowing costs weigh on capital expenditure decisions.
Housing starts fell -4.7% month-over-month, reflecting continued pressure from elevated mortgage rates averaging 7.1%. The services sector expanded at +3.8%, offsetting contraction in goods-producing industries.
The yield curve remains inverted at the short end, with the 3M-10Y spread at -117bp. Historically, sustained inversion has preceded recessions by 12-18 months.