Indicators of future economic activity point to continued rebound in Real GDP.

Most economic data are a report of past activity. Some of the data we follow is indicative of the future direction of the economy. Two data series that fall in this category were released last week. Consumer confidence was reported as having increased by 14.2% in the month of June. There is a 70% correlation between confidence and personal consumption expenditures. This surge in confidence would normally indicate a surge in consumption in the coming months. The other data was the ISM index. This is a diffusion index which means any reading above 50 would indicate an expansion of manufacturing activity in the coming months. The index moved above 50, reaching 52.6 in June.

 

PROBANK AUSTIN ADVISOR - JULY 6, 2020