Payden & Rygel: US real private domestic final purchases
This week, market volatility continued as investors wrestled with potential tariff impacts. Volatility makes sense, as it's difficult to discern changes in the growth trajectory in real time.
Case in point: this week's U.S. retail sales report showed that goods spending increased 1.4% during March - the strongest monthly gain in two years! Yes, ; front-running' tariffs might explain some gains (auto sales were up 5.3%), but other categories reflected normal spending patterns. Further, a way to measure underlying demand is real private domestic final purchases (PDFP), which includes volatile categories such as trade, inventory buildup, and government spending.
Using the Atlanta Fed's GDPNow model to gauge real PDFP after the March retail sales data shows that consumer and business demand still advanced at a healthy clip in Q1 (actual government data for Q1 will be released on April 30th). Is the U.S. economy resilient enough to weather the tariff shock, or is this the calm before the storm?
