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Recession Watch (Jun.)

While our models suggest that recession risks are still low, the Fed’s rapid policy tightening will trigger a marked slowdown in economic growth, which means that the risks are likely to build over the coming quarters. But suggestions that a recession is imminent or inevitable are well wide of the mark.
Michael Pearce Senior US Economist
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US Data Response

Industrial Production (Jul.)

The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the likely drag on manufacturing from the impending global economic downturn means that the resilience of production may not last for long.

16 August 2022

US Economics Weekly

More good news on inflation coming soon

The drop back in CPI inflation in July wasn’t enough alone to convince Fed officials to change their plans for interest rate hikes. But we expect the better news on inflation to continue over the coming months, which will eventually persuade the Fed to halt its tightening cycle early next year.

12 August 2022

US Economics Update

Is there really such thing as a ‘jobful’ recession?

While history shows that recessions can begin even while employment is still rising, the current rate of payroll employment growth is far too strong to be consistent with an economic downturn. By the same token, although we think an outright contraction will be avoided, any recession over the next couple of years would almost certainly coincide with a decline in employment and rise in the unemployment rate.

11 August 2022

More from Michael Pearce

US Data Response

Durable Goods (May)

The surprisingly robust 0.7% rise in durable goods orders last month was much better than some of the downbeat survey evidence had suggested and is consistent with business equipment investment growth slowing in the second quarter rather than going into reverse.

27 June 2022

US Data Response

Consumer Prices (May)

The surprise increase in headline inflation to a 40-year high of 8.6% in May, from 8.3%, together with another strong rise in core prices raises the odds that the Fed will need to extend its series of 50bp rate hikes into the fall, and even opens the door to a larger 75bp move at next week’s FOMC meeting.

10 June 2022

US Data Response

International Trade (Apr.)

The bigger than expected drop back in the trade deficit in April suggests that net trade will be a large boost to second-quarter GDP growth, with the risks to our forecast for growth of 4.8% annualised now mainly on the upside.

7 June 2022
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