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Latest economic data hints at new era of slower growth

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Data: FactSet; Chart: Axios Visuals

Recent economic reports have repeatedly fallen short of expectations, suggesting slower growth is here.

Driving the news: Friday’s report on industrial production failed to match consensus Wall Street forecasts. Factory output declined 0.1% in May. (The forecast was for 0.4% growth.)

The big picture: We’re beginning to see a pattern.

A Thursday report showed housing starts dropped 14.4% in May, compared to April. (Experts expected just a 0.2% decline.)The day before, we learned retail sales unexpectedly dropped 0.3% from April to May. (Forecasts called for a 0.2% gain.) And the June 10 Consumer Price Index for May showed inflation worsening: Prices rose 8.6% year over year. (Analysts thought it would be just 8.2%.)

Go deeper: In fact, economic data is now falling short of expectations by more than we’ve seen since the initial shock of the COVID crisis, according to the Citi U.S. Economic Surprise Index.

How it works: Citi surprise indexes show how economic data compares with consensus expectations.Higher numbers mean data has been better than expected; lower numbers, worse.

The bottom line: The Fed is raising rates to slow the U.S. economy and rein in inflation. The slowdown seems to be coming.