The Economy, Heading Toward Spring
Amid all of the talk about a first-quarter economic slump, we have some new data out this morning that shows the economy is likely to show more strength in the second quarter.
“We’re seeing early signs that the soft patch might be ending,” said Bob Hughes, senior research fellow at the American Institute for Economic Research. “We expect it to be consumer-led.”
The April edition of the ISM Manufacturing Index was released today, showing the index held steady at 51.5. But the details were better than the headline, as key components – production and new orders – showed nice rebounds from March, Hughes noted. One key detail of this index, employment, was weaker.
The University of Michigan also released its report on consumer sentiment – how Americans feel about the economy — this morning, showing the second highest headline number since 2007.
Historically, there has been a strong relationship between consumer sentiment and consumer spending. With the consumer expectations component of consumer sentiment rising to the second highest level since 2004, we would expect consumer spending to pick up, which should help strengthen the overall economy, Hughes said. That’s a point we made in the April edition of Business Conditions Monthly.
And yesterday, we saw initial weekly claims for unemployment remained below 300,000 for the eighth week in a row, another sign of strength, he said.
