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Economic Commentary

Economic Commentary – February 24, 2025

February 24, 2025

Was last Friday's US Purchasing Managers Index for Services the proverbial shot across the bow? It was certainly an attention-grabber, coming in below expectations and indicating the first monthly contraction in the service sector in two years. Although it is not unusual to see a certain amount of drop-off in January spending following a robust holiday sales period, the statistic caught markets and economists by considerable surprise.

Concern about what this might signal for future economic growth was amplified by the Michigan Consumer Sentiment Survey's final figures for February, which were even worse than the preliminary report from early February. Additional economic data this week on spending and confidence will be scrutinized for further information on what may — or may not— be going on with the all-important American consumer. It is not impossible to believe that if the numbers continue to signal a chill passing through the US economy, the budget negotiations critical to avoiding a government shutdown on March 14 will develop a fever and a headache. 

Data to Watch:

  1. Conference Board Consumer Confidence for February, released Tuesday, February 25
  2. US New Home Sales for January, released Wednesday, February 26
  3. US Personal Consumption Expenditures (PCE) Price Index for January, released Friday, February 28
  4. US Personal Income and Consumption for January, released Friday, February 28

Suggested Reading:

  1. Europe’s Economic Stagnation Persists, Latest Business Surveys Say
  2. Why Trump’s Clean Energy Rollbacks Could Derail a Factory Boom
  3. China Pledges to Boost Services as US Calls to Rebalance Economy

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