3 Charts: Why We're Still Bearish On U.S. Growth

Takeaway: Our reading of the bond market, consumer confidence, and S&P 500 earnings confirms our U.S. #GrowthSlowing call.

3 Charts: Why We're Still Bearish On U.S. Growth - GDP cartoon 04.26.2016

Nothing about today's economic data changes our thinking that U.S. economic growth continues its descent off the cycle peak.

Quite the contrary. We’re sticking with our sub-1% GDP forecast for Q2 and the worst profits of #TheCycle in Q2 and Q3. 

All is not well in the U.S. economy, particularly in manufacturing. Today's Chicago PMI clocked in a recessionary 49.3 vs. 50.4 last month. Meanwhile, the Dallas Fed Manufacturing Survey fell -13.1%, contracting alongside the four other regional Fed manufacturing surveys.

Not good.

In the bond market...

The yield spread (10-year minus 2-year Treasury) is not budging. It's still at YTD lows of 94 basis points wide. That's a crystal clear U.S. #GrowthSlowing indicator.

3 Charts: Why We're Still Bearish On U.S. Growth - 10yr treasury 5 31 today

Today's U.S. Consumer Confidence reading did little to inspire, well, confidence. 

It slowed (again) in May to 92.6 vs. 94.7 last month. #TheCycle peak was in 1H 2015. Notice what happens to consumer confidence, in the chart below, once it rolls off the cycle peak.

3 Charts: Why We're Still Bearish On U.S. Growth - consumer confidence 5 31

S&P 500 Earnings are downright terrible.

A grand total of 491/498 S&P 500 companies have reported. The results thus far aren't pretty:

  • Aggregate sales and earnings growth have come in at -2.3% and -8.5% respectively;
  • 6/10 sectors have reported negative earnings and sales growth;
  • Energy sales and earnings growth are down -30.1% and -109.1% respectively;
  • Rounding out the bottom of the barrell: Materials sales and earnings growth are down -8.8% and -16% respectively; Financials are down -1.7% and -14.2% respectively;

3 Charts: Why We're Still Bearish On U.S. Growth - earnings 5 31