Election result still mired in uncertainty

We still don’t know the winner of the presidential election or which party will control the Senate, and, with President Donald Trump threatening to challenge the outcome, the legal wrangling and uncertainty could drag on for some time. It is still possible Democrats end up winning the White House and, with Kamala Harris’ tie-breaking vote in the Senate, control of Congress too. But even in that scenario hopes of a major post-election fiscal deal, along with much of Joe Biden’s broader economic agenda, may be dead on arrival. If Republicans retain the Senate, the odds of another significant fiscal package being passed would be greater under Trump than Biden.
Andrew Hunter Senior US Economist
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US Economics Update

Labour market slack falling to generational lows

The rebound in the job openings rate close to a record high in October means that the number of unemployed Americans per job opening fell to its lowest level since the early 1950s. That underlines the tightness of labour market conditions and suggests recent rapid wage gains will continue.

8 December 2021

US Fed Watch

Fed pivot will take rates to more than 1.5% in 2023

In sharp contrast to the surprisingly dovish November meeting, we expect Fed officials will use their December meeting to lay the ground for markedly tighter policy in the years ahead. The characterisation of inflation as “transitory” will be retired from the policy statement and the pace of tapering will be stepped up, with asset purchases now set to end next spring, rather than summer. In response to the Fed’s hawkish shift, we are revising our interest rate forecasts markedly higher. Rather than waiting until 2023, we now expect the Fed to hike rates twice in 2022, followed by four hikes in 2023, in a tightening cycle that will take rates to more than 2% by mid-2024.

8 December 2021

US Data Response

International Trade (Oct.)

The 8.1% m/m surge in exports in October means that net trade is on course to add about 1% point to fourth-quarter GDP growth, which we think will be 6.5% annualised, and provides more evidence that global supply chain bottlenecks are easing.

7 December 2021

More from Andrew Hunter

US Economics Update

Surveys suggest labour shortages persist

In contrast to the stronger payrolls figures released last week, the latest survey data suggest that labour shortages remain acute. That supports our view that the acceleration in employment growth in June probably wasn’t a sign of things to come and suggests that wage growth is set for a further acceleration.

7 July 2021

US Economics Weekly

Stronger payrolls intensify focus on tapering

We aren’t convinced that it will mark the start of a sustained acceleration, but the stronger gain in June payrolls will embolden those Fed officials calling for an earlier end to the Fed’s asset purchases.

2 July 2021

US Data Response

Employment Report (Jun.)

The stronger 850,000 rise in non-farm payrolls in June may be a sign that some of the temporary labour shortages holding back the employment recovery are starting to ease. But with the labour force rising by just 151,000 and still more than three million below its pre-pandemic peak, we aren’t entirely convinced that this is the start of a much stronger trend.

2 July 2021
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