First, although longer-term yields have begun to move up recently, they remain low by historical standards, and financial conditions remain favorable. Second, business balance sheets are strong, and corporate earnings have been robust. Third, household credit quality has shown few signs of stress.
Finally, households' real income has been receiving a boost from the recent strong gains in employment, and the ongoing increases in house prices and gains in the stock market have kept the ratio of wealth to income at a high level. All told, prospects for ongoing gains in consumer spending and business investment appear good, and the recent indicators are positive.