IS AMERICA’S economy booming? Consumers seem to think so. Their confidence, as measured by the Conference Board, a research group, is at its highest since December 2000, when the dotcom bubble had not fully burst. Yet in both January and February this year, personal consumption fell. The signals from firms are no less mixed. Small-business confidence is so high that relying on this alone to predict annualised GDP growth in the first quarter leads to a staggering forecast of 7.1%, according to Goldman Sachs, a bank. Order books are swelling and jobs are plentiful, firms say. Yet industrial production has been flat since December, and banks have slowed business lending dramatically. Americans seem wildly enthusiastic about the economy, but it is not clear why.
The surge in the so-called “soft” economic data, drawn from surveys, began when Donald Trump won the presidential election in November (see chart). It coincided with a boom in the stockmarket, up 10% since then, as investors began to salivate over the prospect of tax cuts and deregulation. Yet the “hard” economic data, which measure actual economic activity, have trundled along much as expected. The disparity has...Continue reading
Source: United States http://ift.tt/2nP82ML
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