The US is slowing

So, as forecast, the US mini-cycle is slowing. It’s not disastrous. And we need more data for confirmation, but I’m satisfied that a slowing is underway. The ISM manufacturing has held so far but is well below last year’s highs:

But the regional indexes are also showing early signs of rolling over which I expect to show up in the national numbers in the next few months.

On the employment front there’s new evidence of slowing too. Friday’s BLS was disappointing with a gain of 120,ooo jobs versus expectations of 201,000. We are now back within the subdued range of job creation that has dogged the US economy from May to October in the past three years. From Calculated Risk:

Also on Friday, the Federal Reserve released its credit aggregates for February and there is more slowing apparent with revolving credit (credit cards) falling for consecutive months, down 3.3% in February:

Non-revolving credit (student, car, personal and housing loans) are traveling better but the annual growth rate still halved from January to February.

Then there is the Personal Income and Outlays report from the BEA from the week before, which showed that February also showed a run down in the savings rate which has boosted spending but probably only temporarily:

So, income growth remains lousy at 0.2% for February. Indeed, in real terms it fell 0.1%. For growth, however, the news was better with the personal consumption expenditures jumping 0.8% in the month. No prizes for guessing where the surge came from:

“Personal saving — DPI less personal outlays — was $438.7 billion in February, compared with $509.5 billion in January.

The personal saving rate — personal saving as a percentage of disposable income — was 3.7 percent in February, compared with 4.3 percent in January.”

There is now an open question over the effect of the mildest winter on record on US data. This is not dire but the US economy is slowing and will probably slow some more with obvious implications for monetary policy, equities and commodities. It will also filter through to north Asian exports before long.