The complete analytics and charts of this edition are available in a pdf file — see link at the end of this summary.
The week’s economic updates continue to point to moderate growth that’s likely to persist in the near term. Some of the indicators I track hint at a gradual slowdown, but at this stage making the case for a modest tapering is debatable. The PMI survey released yesterday, for example, shows an upbeat profile of stronger growth. Survey data are more sentiment than hard evidence, so caution is warranted, but the Composite PMI Index—used in our GDP nowcast (p. 10 in the pdf file)—signals a pickup in business activity this month.
The PMI report highlights that services are driving August’s improvement, with activity rising at the fastest pace in four years. Encouraging, although it underscores the economy’s growing dependence on consumers—a potential vulnerability if interest rates continue to climb, as they have recently.
The 10‑year Treasury yield rose again this week and is just shy of its highest level since early 2025. Further increases could pressure the consumer sector by lifting borrowing costs and squeezing discretionary income. One early hint: retail sales fell 0.6% in July, the first monthly decline since January and the deepest in over a year. The slowing year‑over‑year trend in the Redbook Index may also be a sign of softening demand.
Still, it’s too early to draw firm conclusions. Until our business‑cycle indicators weaken more broadly, I’m treating the retail data as a possible warning that needs additional confirmation.
On that score, all but one of our indicators remain firmly tilted toward growth. CRPI continues to estimate a near‑zero probability that a recession has begun or is imminent (p. 9 in the pdf file). But the ongoing deceleration in the 10‑period average of the Dallas Fed’s Weekly Economic Index (WEI) deserves attention (see chart below and p. 7 in the pdf file). After a long upswing, the trend is softening, and the longer it persists, the greater the risk that broader economic weakness may be brewing.
