Financial and Economic Brief - July 4, 2017by © Liberty Publishing, Inc.
Consumer Sentiment Falls in June
U.S. consumer sentiment fell to 95.1 in June hitting a seven-month low and falling 2.1% from May, according to a new survey. Even with the latest measures, consumer sentiment is holding on to historical highs in the first half of 2017. In fact, the first six months of the year yielded the highest average for the index since the second half of 2000, according to Richard Curtin, chief economist for the survey. While uncertainty in the economy remains high, Curtin said, it "has thus far been offset by the resurgent strength in the personal financial situation of consumers."
Risk of Default?
According to the Congressional Budget Office (CBO) if lawmakers don't raise or suspend the country's debt ceiling, the Treasury might run short on money. The CBO now estimates that the Treasury might risk defaulting on some payments in the first half of October, previously estimated at sometime in the Fall. "The range of possible dates has narrowed as the budget outlook for this year has become clearer and CBO has increased its estimate of the Treasury's net borrowing needs," the agency noted in a new report. Since mid-March, Treasury has been using special accounting measures to allow the government to continue borrowing.
Q1 Economic Growth "Upgraded"
The Commerce Department reported last week that the gross domestic product grew at an annual rate of 1.4% in Q1 2017, beating the estimate of 1.2%, reflecting the "new-found strength in consumer spending and exports." The result is weaker than 2.1% growth in the Q4 2016 and is still below President Trump's growth targets of the economy growing at more than 3%. Analysts expect growth to accelerate in Q2, powered by strong hiring and an increase in consumer spending. Gus Faucher, chief economist at PNC Financial Services, said the slow growth at the start of 2017 "will prove temporary." Faucher expects the economy to expand at a 2.2% pace for the entire year.