Manufacturing has been on a roll amid a recovery in oil prices, an improving global economy and steady spending by U.S. households. Investment may get a further lift from the tax cuts, but Trump’s tariffs on steel and aluminum have already caused materials prices to spike, which is weighing on factory activity.
The Institute for Supply Management’s survey released Tuesday showed its manufacturing index grew in April at the slowest pace since July.
Housing -- whose collapse triggered the last recession -- is on pace for moderate growth, though it faces headwinds from rising home prices and mortgage rates that have climbed to nearly a five-year high. Residential housing starts are well below the peak of the previous economic cycle, while the National Association of Realtors projects 2018 purchases of existing homes may reach the highest level since 2006.
Tax cuts and higher spending will also add to U.S. government debt. That burden, together with a fading boost from the fiscal stimulus and higher interest rates, may make 2020 a turning point for the economy.
On the other hand, the Conference Board’s leading economic index, a broad measure of the U.S. outlook, shows growth is on course for another decent run, according to Ed Yardeni, founder of Yardeni Research Inc.
“This expansion has a shot at the record books,” he wrote in a note to clients.
This article was provided by Bloomberg News.