Summary
United States: Recession Is Taking Its Time
- Economic data continue to suggest the U.S. economy is only gradually losing momentum. Consumers continue to spend, and industrial and housing activity are seeing some stabilization. We still view a recession is more likely than not by year-end, but there is no denying the underlying resiliency evident in the data.
- Next week: New Home Sales (Tue), Personal Income & Spending (Fri), Durable Goods (Fri)
International: Mixed Trends for Key Asian Economies
- China’s retail sales and industrial output firmed markedly in April, boosted by favorable base effects. However, those activity readings still came in below the consensus forecast and hint at a possible waning in momentum of China’s recovery. In Japan, Q1 GDP rose by 1.6% quarter-over-quarter annualized, more than expected. Consumer spending and business capital spending both rose as well, while Japan’s April CPI also quickened.
- Next week: Eurozone PMIs (Tue), RBNZ Policy Rate (Wed), U.K. CPI (Wed)
Credit Market Insights: Picking Up the Pieces of the Pandemic Refi Boom
- The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit found U.S. aggregate household debt balances rose by $148 billion in Q1-2023. Mortgage debt advanced by just $121 billion in Q1. Mortgage originations for both purchases and refinancing also fell sharply in Q1 to $324 billion, the lowest level since Q2-2014. The historic pandemic-era refinancing boom has tapered off, but its effects will be felt for some time.
Topic of the Week: Fractures on FOMC Emerge
- A majority of Federal Open Market Committee (FOMC) voters made public appearances this week. Policymaker comments are particularly important in assessing the Fed’s path after the May meeting language signaled a data-dependent, month-to-month Fed from now on. The consensus around the Fed’s next steps appears to be fractured.
 voters made public appearances this week. Policymaker comments are particularly important in assessing the Fed's path after the May meeting language signaled a data-dependent, month-to-month Fed from now on. The consensus around the Fed's next steps appears to be fractured.){kind=link}