Coming in for a Landing!

Chart of the Week for July 7-13, 2000

Two important data trends indicate that the Fed’s series of interest rate increases is having the desired effect. Elements of the economy are softening.

Personal spending (the blue line above) peaked in January and while it remains robust, it is clearly in a slowing trend. Higher interest rates may be inducing consumers to save, rather than spend, and to avoid more expensive credit. (Data are available only through May.)

Expansion in the manufacturing sector (the red line above) is also tapering off. The National Association of Purchasing Management (NAPM) Index remains above 50, indicating growth, but is falling each month and stood at 51.8 in June.

Short-term implication: the Fed may not have to raise interest rates at its August meeting.

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