A DEEPER LOOK AT THE U.S. ECONOMY, 1ST QUARTER 2018

In an article by Justin Lahart (updated May 30 in the WSJ),* corporate profits overall are not as good as they seem.  The figure shows that the stocks in the SandP500 are doing excellently, things don't look nearly as good when you include all stocks which are flat.

(Click on figure to enlarge)

In addition, the GDP increase for the ist quarter was adjusted downward to 2.2%.**

(Click on figure to enlarge)

A drag on the economy has been poor spending on plant and equipment as well as government spending.  An article by Ben Leubsdorf in the May 30, WSJ shows that spending has shifted.  The figure below shows that corporate and government spending increase nicely in the first quarter.**  But spending on residential investment and consumer spending on goods, both decreased, and it is consumers that have been boosting the GDP so we are yet to get all the principal categories increasing at the same time.**

(Click on figure to enlarge)

I am not surprised that consumers are taking a breathing period because mortgages, credit cards, and household debt are all near all-time highs.***

* https://www.wsj.com/articles/why-corporate-profits-may-be-weaker-than-they-seem-1527701696
**https://www.wsj.com/articles/u-s-gdp-growth-revised-down-to-2-2-rate-in-first-quarter-1527683513?mod=article_inline
*** https://www.mpamag.com/market-update/outstanding-mortgage-balances-nearing-alltime-high-97174.aspx
http://www.bankingexchange.com/news-feed/item/7551-credit-card-usage-hits-all-time-high
http://stopcontinentaldrift.blogspot.com/2017/11/household-debt-at-new-high.html