A record U.S. expansion has no end in sight, Barclays Capital says.
The U.S. economy is still in expansion mode, Barclays Capital says. They base their call on labor data, with all signs pointing to tighter labor markets throughout the summer. The economic expansion that began in the Obama years, mostly thanks to the Federal Reserve, has contined to rage on in the Trump years. This time thanks to the Fed, fiscal stimulus and regulatory rollback passed in Trump's first year in office. June will market the 10th year of a growing economy.
Gapen and his team at Barclays think 2018's rise in the participation rate has been reversed and he expects the unemployment rate to dip lower.With the first quarter behind us, investors were surprised that tariffs have not hurt profit margins enough to send markets lower.Cost-cutting and efficiency gains due to advances in technology are helping to moderate inflation, higher costs from tariffs, and higher wages.
How to explain this apparent disconnect? Companies have been using technology to drive efficiencies that keep costs down, reduce the need for labor and help keep profit margins stable. Automation, coupled with another fact -- household deleveraging -- have served to keep inflation in check. The U.S. economy still faces serious market factors like global trade talks. Trump promises to increase tariffs on China. If not China, maybe Europe. The threat of higher costs is always there, with a full blown trade war back on the table after Trump's Twitter rant on Sunday about China trade talks.
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