US: Recession fears resurface – ING

By FXStreet Research Team at ING, suggests that the further decline in US GDP growth in 1Q16 could resurrect thoughts of a US hard landing – the evidence is still mixed, but warning signs are mounting.

Key Quotes

“We take a look at the current likelihood of a US recession and assess the usefulness of a range of models/indicators in signalling the next economic downturn.

Key Points:

• Weak (0.5%) 1Q16 GDP marks the third-consecutive slowdown in US GDP – this is beginning to look like a trend – and we can’t blame the weather this time;

• But it is not unprecedented – and we need more evidence before we start calling “Recession”;

• Our biggest concern is with business investment, on which politics and uncertainty are weighing heavily;

• Consumer spending is also weaker than it should be – but we can put this down to the end of the oil windfall;

• Some parts of the US economy remain in reasonable shape – recession is still a tail risk rather than a strong probability;

• But there are some growing warning signs – not least in residential construction and even the labour market – and these will need careful watching.”
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Source:: FX Street