CitiUS Economics Weekly The cycle is turng_

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the US economy, indicating a significant slowdown and potential contraction ahead. [2][5] Core Economic Insights - Consumer Spending: - Declined by 0.1% MoM in April, with Q1 data revised to show a more dramatic decline in real goods spending. [2][5] - Real services spending slowed to 0.10% MoM in April, indicating a weakening trend. [8] - Cyclically sensitive spending on restaurants has declined in four out of the last five months. [9] - Inflation: - Core PCE inflation slowed to 0.249% MoM and 2.75% YoY in April, which is still elevated but shows signs of easing. [15][27] - The slowdown in "supercore" nonshelter services to 0.26% MoM is viewed positively by Fed officials. [15] - Labor Market: - A projected 140k new jobs are expected in May, with an unemployment rate rising to 4.0%. [15][18] - Job openings are expected to decline to 8.39 million, reflecting a tightening labor market. [20][41] - Credit card delinquency rates are at their highest since 2007, indicating financial strain among consumers. [5][6] Federal Reserve Outlook - The Federal Reserve is expected to initiate a 25 basis point rate cut in July, with a total of 200 basis points of cuts anticipated through June 2025. [2][5] - Fed officials are likely to adjust their projections in June, potentially reducing the number of expected rate cuts for 2024 from three to two. [16] Consumer Confidence and Spending Trends - The Conference Board consumer confidence index rose to 102.0 in May, driven by improved expectations. [22] - The share of disposable income going to rent has increased, further straining consumer budgets. [6][8] Trade and Construction Insights - The goods trade balance is expected to widen to -$76.2 billion, which could negatively impact Q2 GDP. [45] - Construction spending is projected to decline slightly, reflecting weaker housing demand and rising mortgage rates. [53] Additional Observations - The report highlights a potential non-linear adjustment in the labor market, with firms possibly resorting to layoffs rather than just slowing hiring. [11][12] - The upcoming jobs report is critical, as it will influence Fed policy and market expectations. [17][18] This summary encapsulates the critical insights and projections regarding the US economy, consumer behavior, inflation trends, and the Federal Reserve's anticipated actions.