Personal income and spending, consumer sentiment

Modest growth continues.

The data keeps telling me the rate hikes are helping the economy rather than hurting it:

This is nominal, not adjusted for inflation, and there is no evidence of rate hikes slowing anything down:

Same here for inflation-adjusted consumption:

Too soon to say it is turned up, but better than expected and not indicating a recession:

“The University of Michigan consumer sentiment for the US was revised lower to 58.6 in September of 2022 from a preliminary of 59.5, but remained above 58.2 in August and the highest in five months. Expectations were revised sharply lower (58 vs 59.9 in the preliminary estimate) while current conditions were seen better (59.7 vs58.9). Buying conditions for durables and the one-year economic outlook continued lifting from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long run outlook for business conditions. Meanwhile, inflation in the year ahead was seen higher (4.7% vs 4.6% in the preliminary estimate) while the five-year outlook was revised lower (2.7% vs 2.8%).” (United States Michigan Consumer Sentiment)




Industrial production, retail sales, unemployment claims, comments

This index is settling in to about a 3.5% annual rate of growth.
No recession indication here:

No recession here either:

No sign of recession here:

Markets are being driven by the understanding that the Fed will continue to raise rates until there is a recession, not realizing that rate increases, with debt/GDP as high as it is,
result in a sufficiently large increase in government deficit spending on those interest payments to support both the growth of private sector total spending on goods and services as well as to support prices.

So what happens each cycle is the Fed raises rates and supports growth until something else causes a recession. Recent history has seen the automatic stabilizers (tax receipts rising and transfer payments falling with growth) bring down gov deficit spending sufficiently to end the cycle, while at the same time the Saudis have raised oil prices until the economy and demand collapses.

Unemployment claims, PMI services, mtg applications and lending

No sign of recession, and lots of indications the rate hikes that are adding to deficit spending as supporting the economy and prices, and not depressing them, and more rate hikes will only do more of same.
And it doesn’t end until the Fed understands it has had it all backwards:

This is about 85% of the economy.
No recession yet. More and more the data is telling me debt/gdp is plenty high for rate hikes to be supportive of total spending in the economy:

Housing has been weak since the rate hikes, but the declines have been diminishing and with the continuously increasing personal income from (lower but still high) government deficit spending.
I’m expecting housing to show modest growth going forward, in line with the rest of the economy.
Note that applications are down but lending is still growing rapidly: