By Bertel Roslev Rasmussen

Perhaps the US economy is not doing quite as well as we thought.

The global economy has generally been on the upswing throughout 2024, as confirmed by the Global Purchasing Managers' Index (PMI), which in May rose to its highest level in 12 months. This overall picture includes positive growth news from Europe, where there are signs of growth recovery from a low level, and from China, where the worst of the pessimism has subsided due to e.g. aid packages for the struggling property sector.

In the US, however, the key figures in May have created uncertainty about the real size of the economic recovery, which many took for granted earlier in the year. A weak industrial barometer, falling consumption in April and large downward revisions of previous job and growth figures have cast doubt on the sustainability of the recovery.

The US jobs numbers have surprised economists several times during 2024, and the strong jobs numbers have been a solid anchor in a narrative of a very hot US job market and an underlying economy in growth. Recently, however, previous jobs numbers have been revised downwards significantly in the revisions that follow the preliminary jobs numbers. These are the figures typically referred to in the Danish press as the "king numbers". The revised jobs figures show significantly lower job creation than the preliminary figures showed - in fact, up to 200,000 fewer new jobs per month, which changes the picture of the US job market significantly.

However, last Friday's US jobs report was very strong with 272,000 new US jobs - significantly above expectations of 175,000 jobs. The jobs report is therefore a reflection of the zig-zagging trend that is currently happening to the US economy, causing economists to tear their hair out.

The recent negative revised jobs reports, for example, have led several prominent US economists to predict that the US is already in recession. However, the numbers give us pause to reflect on whether the surging stock market, which in some segments is priced to disappoint, is ready for a new narrative of a US economy with more modest growth prospects.

If the US economy disappoints, we are likely to see falling interest rates and falling share prices, with the most high-flying equity segments hardest hit.