Bank of the West U.S. Outlook Report for April 10, 2015

We already knew the economy has been slowing over the past two quarters. In contrast, labor market indicators have been a beacon of strength and resilience. This has provided the bedrock for macroeconomic forecasts of a consumer spending-led revival in the second quarter and over the balance of the year.  However, the weak March payroll report and the downward revisions over the past two months add another element of doubt to the baseline forecasts. This should keep the Fed data-dependent in the second quarter, despite talk of a possible rate hike, and push the first rate hike from the Fed into September.

The question hanging in the air today: Is the current slowdown just another temporary blip, or are we in for a more prolonged slog?  A growth rebound is still the most likely course ahead for the U.S. economy, but we thought now would be a good time to review the labor market indicators that continue to point to caution as the Fed contemplates when to pull the trigger on its first interest rate hikes.

To find out more, check out this week’s US Outlook Report.