A Fed official highlighted ‘some warning signs the real economy is weakening’ Here are two

July 4, 2024 6:34 pm

Goolsbee

On Tuesday, comments from Chicago Fed President Austin Goolsbee got my attention. He took a more cautious stance on the economy and said he sees “some warning signs the real economy is weakening.”

He also spent the past year talking about the potential for a ‘golden path’ or soft landing but sounded more cautious, saying it was ‘still possible’.

Goolsbee is a dove so it doesn’t surprise me that he’s one of the first to highlight growth worries but here are two charts that highlight the shift in the economy.

1) The Bloomberg US economic surprise index

Bloomberg and Citi have similar indexes that measure economic data in relation to consensus expectations. On Wednesday, the ISM services number far undershot the consensus and that helped to send this index to a nine-year low in an indication that economists have been too complacent about growth.

2) Atlanta Fed GDPNow

A second chart painting the same picture is the latest set of updates from the Atlanta Fed’s GDPNow tracker for Q2 growth. The quarter is now done and we’re just three weeks away from the first reading on GDP. In just two weeks, the index has been cut in half to 1.5%.

I’m watching closely for more corporate commentary about a demand slowdown and, of course, Friday’s non-farm payrolls report will be a key reading on the health of the economy.

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