US job openings rose in April, highlighting resilience in the labor market. Despite uncertainty related to the trade war, the Labor Department reported that employers posted 7.4 million job vacancies in April, up from 7.2 million in March. “Once companies are more certain that bad times are coming, they will start to shed workers,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a commentary. “However, the economy is still near full employment. We suspect companies are still hoarding workers until they are very, very sure about an economic downturn.″

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The long-run expected total return for the Global Market Index (GMI) ticked higher again in May, edging up to an annualized 7.2% from the 7.0% estimate in the previous month. Today’s estimate is slightly below GMI’s realized 10-year performance. The forecast is calculated as the average of three models (defined below) for GMI, an unmanaged global benchmark that’s based on a market-value weighted mix of the major asset classes (excluding cash).

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US manufacturing contracted for a third straight month in May, based on survey data. The ISM Manufacturing Index edged lower last month to a six-month low of 48.5, moderately below the neutral 50 mark that separates growth from contraction. “The outlook for the manufacturing sector looks downbeat, particularly with the initial surge in demand from front-loading now behind us,” said Matthew Martin, senior economist at Oxford Economics. “Businesses are contending with higher input costs, supply disruptions, and domestic and foreign customers wary of committing to new orders.”

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US stocks rebounded in May, posting the first monthly gain since January. The strong recovery lifted American shares to the top of the leaderboard for the major asset classes last month, based on a set of ETFs.

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US consumer spending rose for a third month in April, matching expectations with a 0.2% monthly increase. Profiling consumption expenditures on a real (inflation-adjusted) year-over-year basis suggest the trend still looks resilient via a 3.2% increase (see chart below). Notably, the year-over-year change for real disposable income (DPI) continued to rebound, rising to a 2.9% pace. The pickup in DPI in recent months suggests that the consumer sector will continue to grow in the near term and provide timely support for the economy that’s facing tariff-related headwinds.

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The Capital Spectator is decamping to Edinburgh and Lisbon for the next week. The usual schedule resumes on Tuesday, June 3. Meantime, please leave a light in the window for your wandering editor.

● Empire of AI: Dreams and Nightmares in Sam Altman’s OpenAI
Karen Hao
Interview with author via the Global and Mail
In her new book, Empire of AI: The Dreams and Nightmares of Sam Altman’s OpenAI, Hao follows the rise of OpenAI. She tracks how the company transformed from a non-profit that positioned itself as an idealistic underdog into the world’s largest AI company worth US$300-billion.
Alongside the fly-on-the-wall observations of OpenAI’s work culture, built from hundreds of interviews with employees, e-mails and Slack conversations, Hao pulls back the curtain on the departure of early investor Elon Musk, the reinstatement of charismatic Chief Executive Officer Sam Altman and reports from Colombia and Kenya, where she interviews low-wage contract workers who were tasked with categorizing the severity of graphic content used to train ChatGPT.

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The mega spending bill that the House passed now awaits debate in the Senate. A key issue for markets is how, or if, the legislation will be amended with respect to projections that, if passed, the bill will deepen an already hefty federal deficit in the years ahead and thereby stoke inflation concerns as the government’s borrowing needs increase.

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US economic activity slowed for second month in April, according to the Chicago Fed’s National Activity Index: “Three of the four broad categories of indicators used to construct the index decreased from March, and three categories made negative contributions in April. The index’s three-month moving average, CFNAI-MA3, was unchanged at +0.05 in April.”

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The government bond market had been more or less flatlining since  since President Trump on Apr. 2 announced “Liberation Day” and rolled out US tariffs, which sparked concern about inflation. But in recent days a new headwind is weighing on fixed income securities: a US government budget bill (that was approved by the House this morning), which is expected to significantly raise an already hefty federal deficit in the years ahead.

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