On Tuesday, Chicago Fed President Austin Goolsbee made a shift in his tone regarding the economy, expressing concerns about warning signs that suggest a weakening real economy. In contrast to his past discussions of a ‘golden path’ or soft landing, Goolsbee is now more cautious and has stated that it is ‘still possible’. His recent comments reflect a more dovish stance, which is not surprising given his history of raising growth worries.
Two charts in particular illustrate this shift in the economy. The first is the Bloomberg US economic surprise index, which measures economic data against consensus expectations. Following the ISM services number falling far short of the consensus, this index hit a nine-year low, indicating that economists may have been too complacent about growth. The second chart is the Atlanta Fed GDPNow tracker for Q2 growth, which shows a significant decrease in growth projections to just 1.5%.
I am closely monitoring further corporate commentary regarding a potential demand slowdown and eagerly awaiting the release of the non-farm payrolls report on Friday. This will serve as a key indicator of the overall health of the economy and provide further insight into Goolsbee’s concerns about warning signs indicating a weakening real economy.
