Some days are better than others

US trend – at Moneyweek.co.uk - the best of the week's international financial media.

The trouble with mediocrity is that it's boring. And economic commentators, looking for reasons to explain market behaviour, generally like to make things sound a bit more exciting than they really are.

This can mean that the most recent month's data point for a particular series can be given a disproportionate weighting by financial markets analysts looking to preempt the next change in direction. This current phase is a case in point. Nice US payroll data and strong retail sales in April have encouraged the soft patch' theorists to declare yet another oil-induced slump to be over. In our view, evidence that there ever was anything that could be called a soft patch' is pretty thin on the ground. The fact of the matter is that the economy is amid a weakening trend with normal month-to-month volatility of data sometimes exaggerating and sometimes masking that trend. We continue to believe the ebb and flow of monthly data will generally deliver a disappointing growth outturn relative to the market's and, more importantly, the Federal Reserve's apparent expectations, keeping a lid on Fed policy action for most of the second half of this year.

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