Registered Investment Adviser Caleb Lawrence
As expected the Fed left interest rates unchanged this morning as the economic data just isn’t strong enough to justify or support higher interest rates. That said the parade of wishful thinking and pie in the sky estimates continue.
Despite a 1.8% gain in vehicle sales to 16.9 million units during April. Dealer incentives hit nearly 10% of the average sticker price reaching a record $3,465 per unit, higher than a year ago and beating the previous record of $3,393 seen in April of 2009 as sales collapsed during the great financial crisis. On a year ago basis sales fell 4.7% despite a 13.4% increase in dealer incentives, hardly a ringing endorsement of economic strength, especially when taking into account the high inventory levels.
Despite all this, initial estimates of 2nd quarter Gross Domestic Product or GDP started out at an eye opening 4.3% as per the Atlanta Fed’s GDPNow model. I guess they didn’t get the data on auto sales, construction spending or personal spending. The now predictable charade of economic growth estimates continues, based on the current data will be lucky to produce a figure half that.
The April ISM or Institute of Supply Management Non-Manufacturing or services index as it is more commonly known gained 2.3 points to 57.5 on strength in new orders and activity, employment slipped fractionally, prices paid advanced 4.1 points to a modest 57.6.