From Brian Rose, Economist, UBS:


. We expect the economic recovery to continue, driven mostly
by household spending.
. Early data for the second quarter points to better growth
after a tepid first quarter.
. We anticipate that the Fed will hike twice this year, in
September and December.


Recent developments:

Growth slowed to a tepid 0.5% annualized rate in the first quarter
as consumer spending was sluggish and energy-related investment
plunged. Early data for the second quarter points to better growth,
although job growth fell short of expectations in April.
Financial conditions have improved over the past three months,
which should help support the economy in the months ahead.
Public comments made by Federal Open Market Committee (FOMC)
members suggest that the Fed is likely to raise rates this year.

Outlook:

We expect the economy to continue growing at a moderate pace,
driven mostly by household spending. The continued improvement
in the labor market is a very reassuring sign that a recession is not
imminent. Given US demographics, we estimate that the economy
can supply between 80,000 and 100,000 workers per month.
Actual job growth has greatly exceeded that rate
over the past few years. The unemployment rate is down to 5%, and
the tighter labor market has been helping to draw people into the
labor force. Business surveys suggest that employment will continue
to rise at a solid pace, although there are some areas of the economy
that are shedding jobs, particularly the energy sector.

The improving labor market will provide consumers with the income
they need to increase spending. Wage growth has been modest (see
Fig. 3) but appears to be picking up a bit as the remaining slack gets
used up. Job openings are near record-high levels and there is some
anecdotal evidence of labor shortages, although this is still confined
to a relatively narrow segment of the labor market. Over time, we
expect shortages to become more widespread, at which point job
growth would slow to a more sustainable level.
The household savings rate has drifted higher in recent months,
but we do not expect this trend to continue. Consumer spending
got off to a good start in the second quarter as auto sales reached
a record for the month of April. Household balance sheets are in
reasonably good shape, the job market is strong, interest rates are
low, and credit is available. We therefore expect spending to rise in line with income.


Housing investment crashed when the global financial crisis hit, and
has still not fully recovered . We expect housing starts
to eventually reach 1.4 - 1.5 million units a year, compared with the
recent pace of 1.1 - 1.2 million. Demand for housing has been supported
by the improving labor market and low interest rates. Both
home prices and rents have been rising at a solid pace, which suggests
that supply-side bottlenecks are preventing starts from rising
as quickly as demand. We expect starts to continue trending higher,
providing modest support for overall economic growth.
Outside of consumer spending and housing, the outlook is not that
positive. Business investment is being restrained by the collapse
in energy-related investment and overcapacity in manufacturing.
However, service industries should continue to modestly increase
investment spending.

Government spending should also increase modestly. The economic
recovery has improved tax revenues, allowing local governments to
spend more. The budget deal reached in Congress last year will
expand the federal budget deficit and provide a bit of economic
support.

Inventories are likely to remain a drag on growth in the near term,
although some progress has been made on reducing excessive
inventory levels. Net exports will also be a drag as weak external
demand restrains exports, while growing consumer spending will
bring in more imports.
Inflation has shown surprising strength in early 2016, with the core
CPI rising at a 2.6% annualized rate in the first quarter.
We think some of this rise is just noise in the data, but it does
appear that inflation is starting to trend higher. Downward pressure
on prices from the strong dollar and low energy prices is fading,
while the tighter labor market is supportive of service prices.

Fed to hike rates further in 2016
The Fed raised rates last December and has been on hold since then.
In our view, the April FOMC statement opened the door to a rate
hike at future meetings, although the wording suggests that a June
hike is fairly unlikely. It is important to keep in mind that back in
March, all 17 members of the FOMC indicated that they expected a
rate hike in 2016; 16 of them indicated two or more hikes, assuming
the Fed moves in 25-basis-point increments. The basic stance of
the FOMC is that it will gradually raise rates as the labor market
improves. We therefore anticipate that the Fed will hike twice this
year, in September and December.
The gap between market expectations for Fed policy and those of
the FOMC members is very wide . The market is pricing
in only a bit more than two 25-basis-point rate hikes by the end of
2018. FOMC expectations have consistently missed on the upside
since the financial crisis, so it is natural for the market to be skeptical,
but in our view, economic growth, inflation, and the labor
market will be strong enough for the Fed to hike rates faster than the
market expects.

-------------------------
So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.

Not reality, an educated guess.

-------------------------
I :heart; Q

as opposed to the political guesses you post.

-------------------------

"One of the reasons why propaganda tries to get you to hate government is because it's the one existing institution in which people can participate to some extent and constrain tyrannical unaccountable power." Noam Chomsky.

Pretty much the same.

-------------------------
I :heart; Q

Analysis and projection based on data is preferable to the politico-rectal expulsion of the right wing echo chamber.

-------------------------
Capitalism is based on the ridiculous notion that you can enjoy limitless growth in a closed, finite system.

In biology, such behavior of cells is called "cancer".

A friend of mine sent me this:

"In 1982, the U.S. was wrenching from a deep recession with unemployment hitting a high of 10.8%. Manufacturing jobs were being lost to cheaper labor in other countries as big labor priced itself out of world market competitiveness. They asked for wage increases to match inflation and forgot that folks in foreign countries could do the work cheaper.

The investing crowd thought a reduction in emphasis on manufacturing in the U.S. would permanently hurt GDP growth. History shows that household formation led by baby boomers, and the houses and cars which they bought, overwhelmed the economy from 1982 all the way to the late 1990's.

This is a good picture today as the media and major political figures argue that a shrinking middle class, off-shoring of manufacturing jobs and economic inequality mean a bleak future for GDP growth in America. It is my opinion that the 86 million Americans between 21 and 39 years of age are preparing to overwhelm the economy over the next ten years in a similar way. "


-------------------------
So if you are a surfer I wish you the prosperity that allows you more time to pursue the salt water dream, and the true happiness that comes from warm water, clean waves and the companionship of your fellow surfers. If you are an internet troll just spewing bs then f off.