U.S. Economy: Will April Showers Bring May Flowers?

U.S. retail sales posted a 1.3 percent gain in April, their largest leap in more than a year. But do the latest retail numbers mean that fear of a U.S. recession and/or a major stock market pullback are no longer in play?
 

“This is clear evidence that consumer spending is alive and well,” PNC Financial Servces chief economist Stuart Hoffman said of the April retail numbers.

A healthy U.S. consumer tells a different story than U.S. bears,  who have been predicting a recession since late-2015. A recent MarketWatch poll found that economists are expecting a moderate, but healthy, 2.3 percent growth rate from the U.S. economy in Q2.

Economic growth in Q2 will likely come up short of its pace in the past two years. Weakness in the manufacturing sector, as well as a softening jobs market are two contributing factors.

Related Link: History Shows Fed Tightening Will Likely Lead To U.S. Recession

The next major catalyst for the U.S. economy could be another Federal Reserve’s interest rate hike, which economists believe could come as soon as June.

The Federal Reserve doesn’t have a very good track record of tightening rates without triggering recessions. Only three of the Fed’s 12 tightening cycles since the Great Depression did not resulted in a recession within two years.

After a historically weak open to 2016, the SPDR S&P 500 ETF Trust SPY is now up 1.2 percent year-to-date.

Disclosure: the author holds no position in the stocks mentioned.