Today we release the July edition of AIER’s Business Conditions Monthly, our bird’s-eye look at the economy. This month’s edition includes an overview of the labor market, noting the progress made since the Great Recession, as well as a look at the challenges that remain.
In regard to the labor market, “while deficiencies persist, substantial gains have been made, producing record numbers of payroll jobs and job openings. Among the important resulting implications are the high probability of the first increase in the Fed funds target rate since 2006 and the potential for faster wage growth, which could boost consumer spending, raise pricing pressures, and squeeze corporate profits. These are signs of a strengthening economy,” according to the report.
“While important and impressive, these gains leave plenty of room for improvement,” namely in the unemployment and underemployment rate, and slow growth in hourly earnings, according to the report.
Business Conditions Monthly includes our unique, proven set of indicators that predict recessions. Our index of Business-Cycle Conditions Leading Indicators remained at 64 in June, the same as May, still well over the neutral level of 50. Our cyclical score of leaders fell a single point, from 84 in May to 83 in June, but still strongly positive. These indicators suggest a rebounding economy and less chance of recession.
AIER’s inflationary pressures scorecard saw 15 of 23 indicators show rising pressure in May, suggesting that prices may rise in the coming months.