The U.S. Economy Deserves a Lot More Credit
Interest rates are likely to work their way higher and the yield curve will continue to flatten, which shouldn’t be troubling.
A tight labor market will keep the economy humming.
Photographer: Joe Raedle/Getty Images
The U.S. economy is rolling along with far better prospects for solid growth than is widely realized, despite the many distractions that abound. This suggests that the path of least resistance for the equity market is higher, even if the rise is punctuated by occasional downdrafts instigated by new political, trade or other developments. For the same reasons, interest rates are likely to work their way higher and the yield curve will continue to flatten, which shouldn’t be troubling.
Disappointing economic reports pop up all the time, such as the modest gain in first-quarter gross domestic product. But that was neither unusual nor significant. The median estimate of economists surveyed by Bloomberg is for the government to say Friday that GDP rebounded to a 4 percent rate last quarter, the fastest since 2014, on the back of strong hiring trends, consumer spending, capital goods orders and numerous other items.