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Week In Review


The Commerce Department reported that GDP grew at a 0.7% annual rate in the first quarter. Consumption rose just 0.3%. Business and residential investment rose, as did net exports. Government spending fell 1.7%.

Our Take

Weakness in the first quarter is being explained in part by weather-related factors and weak car sales. That said, the first quarter was very weak. While the U.S. economy continues to muddle along (year-over- year growth of 1.9%), economists are hopeful that activity will pick up in the second quarter, as measures of consumer confidence remain high.


Emmanuel Macron and Marine Le Pen advanced to the second round of the French presidential election, which Macron is expected to win by a wide margin. European capital markets expressed relief that France will likely be led by a centrist that is committed to the EU. At French urging, the EU hardened its negotiating stance for the upcoming Brexit talks. The EU position will now be that the UK owes a higher amount and that financial services will be negotiated separately from the rest of any free trade agreement.

Our Take

While Macron was running as an upstart and not as the candidate of any of the established French political parties, he is likely to increase France’s commitment to the EU. Things seem to be moving toward a more confrontational Brexit as the EU is maintaining unity and May is seeking to consolidate her position in front of June elections.

Durable Goods

Durable goods orders rose 0.7% in March. Expectations were for a 1.3% increase. February orders were revised higher to 2.3% from 1.8%.

Our Take

Including revisions, durable orders were about as expected. Businesses seem to be investing with the hope that government implementation of pro-growth measures will be coming soon. Whether that continues depends on actual implementation rather than just hope.


The Illinois House of Representatives approved a bill that would stabilize Chicago’s municipal and laborer pension fund. The bill, which has the support of Mayor Rahm Emanuel, calls for new hires to contribute more toward their retirement. The Illinois Senate has already approved the bill. Governor Bruce Rauner has said that he will veto the bill.

Our Take

Republicans and Democrats in Illinois remain at odds. The pension bill received no Republican votes in the House this week. Governor Rauner already vetoed a similar bill in March that had been passed by the old legislature. Illinois is approaching its second full year without a budget. Lawmakers must work on a compromise that addresses the state’s pension problems and end the budget impasse. Illinois cannot afford for the stalemate to continue.