The pulse of the global economy has slowed. Soft data is weak, and hard data is softening. Earnings revisions are lower, equity markets are higher, with valuations extreme.
In this quarterly we review the US economy and the sagging US consumer. We put US housing construction employment in the spotlight and highlight the role homebuilder profit margins have played in confounding employment expectations. We then transpose this analysis to the broader economy.
In doing so, we reduce the chance of a recession occurring in the US to c.50% in the next 12months. The alternative is likely to be sub-trend growth with a risk of increased inflation.
Should the US economy fall into recession, the global economy is likely to follow suit.