Improvement came from slightly higher consumer spending and slightly less drag from international trade, but investment, inventories and government spending were all revised slightly lower. Capital spending is expected to remain strong, though construction spending should be weaker. Jobless claims continued their upward drift, rising 2,000 to 306,000 in the week ending June 24. The four-week moving average is now to 305,250. Consensus expectations was for a decline to 895,000 but the April data was revised significantly lower to 877,000 from the initially released 909,000.
Consumers appear to be taking a breather following their first quarter shopping spree.
Importantly, the PCE deflator was flat in May for the second month in a row. Investors will be closely watching economic data over the next couple of weeks for signs that the economy is rebounding. The Fed's statement following the FOMC meeting was that the economy appears to be slowing but the slowdown could prove temporary. Based on the rebound in durable goods orders last week, the economy may be recovering already. The most important economic indicator this week is the employment report released on Friday and this is expected to show slowing payroll growth but increasing average hourly earnings.