In the June edition of Business Conditions Monthly, the American Institute for Economic Research’s bird’s-eye view of the economy, we see a falling probability of recession.
After three months at the neutral level of 50, our index of Business-Cycle Conditions leading indicators rebounded nicely, rising to 64. Our cyclical score of leaders also rose from 79 in April to 84 in May. “The results suggest a receding risk of recession,” according to the report.
Moderate economic growth would build on sound fundamentals of key components of demand, like consumer spending, business investment, and to a lesser degree, residential housing, according to the report. That would spur growth in private, nonfinancial sector credit, which has been lagging during the current economic expansion.
“As the economy rebounds, extending loans to more creditworthy customers helps both banks and borrowers and will provide another sign of a return to normalcy in the financial system following the Great Recession,” according to the report.
AIER’s Inflationary Pressures Scorecard shows 12 of our 23 indicators showing rising inflationary pressures in April, the most recent month measured in the report, up from nine in March. This suggests higher consumer prices may follow in the coming months.
“Two factors behind the firming up in April loom large—rebounding energy prices and the depreciating foreign exchange value of the dollar,” according to the report.
Click here for information on how to read the full report.