In addition, according to recent sentiment surveys, consumers have become more upbeat recently, and consumer spending has continued to advance. Even orders for capital goods have exhibited some encouraging signs over the past couple of months. Other data indicate some downside risks to the outlook.
In the past few months, despite some abatement, payrolls continued to decline and the unemployment rate jumped to 5.8 percent, putting a dent in labor income. Moreover, some of the resilience in household spending last quarter was likely due to temporary factors: the zero percent financing available from automakers, the steep discounts at retailers, and warm weather. Additionally, corporate profits remain quite soft.