This monitor is a reflection of how we update our assessments of economic growth in real-time as we get meaningful updates from macroeconomic data releases. It provides a more timely and meaningful gauge of economic activity growth than what GDP and similar summary indicators provide. Please see here for more details about how to interpret this information.
Bottom Line: The flow of data is mostly serving to confirm what we had already highlighted: the economy is in the midst of a 'stabilizing slowdown.'
Summary / Takeaways:
- Caution When Citing Payroll & Average Hourly Earnings: The employment report largely served as confirmation that the economy is stabilizing around a non-recessionary outcome in the absence of new shocks. We would caution that nonfarm payroll and average hourly earning estimates for May might be distorted by a very weak collection rate. Only half of the final collection rate was fulfilled in May, idiosyncratically weak relative to what's collected for a preliminary release.
- Household Survey Details Look Decent: The household survey seemed to be weighed down by a decline in self-employment, but looked far less worrisome otherwise. Adjusting for the self-employment effect (which drove the unemployment rate surge) and aging factors, employment held steady after two breakout reports in March and April. Take the last three months in totality and we still have a robust trend of job growth.
- Oil Price Shock Risks: The energy sector is seeing a sharper drop-off in rig counts. Declining investment in US crude oil production is an incremental headwind for growth Q2 GDP, but the bigger concern is that this investment decline raises risks of an oil price shock in 2024 (in the absence of forward-looking SPR-refill policies).