US economic growth remains strong, based on data published to date, but today’s business-cycle profile continues to suggest that we’ve seen the peak. Recession risk remains low and near-term projections point to more of the same. The question is whether there’s trouble brewing for 2019?
At this stage it’s too early to answer with anything more than rank speculation. Looking beyond two or three months for business-cycle analysis is always a guessing game. As such, the upbeat state of the economy in the here and now remains the best guess until yet-to-be-published numbers offer a convincing reason to think otherwise. Nonetheless, the rear-view mirror tells us that the cycle has peaked and so the only mystery at this point: How far, how deep, and how long will the deceleration run?
Leaving those crucial questions aside, the macro profile for the US remains healthy. Consider, for instance, that the average nowcast for GDP growth in the third quarter (based on current estimates via the Atlanta Fed and New York Fed’) is a solid 3.3%. That’s a moderate decline from Q2’s sizzling 4.2% increase, but the current outlook for Q3 betrays no sign that a recession is imminent.