Delta and Ida add to headwinds

With employment increasing by less than 250,000 last month and other incoming data disappointing, the recovery appears to be losing momentum even faster than our already-below consensus forecasts imply. The slowdown initially reflected the fading of the fiscal stimulus, ongoing supply shortages and the detrimental impact that the related surge in prices has had on households’ purchasing power. But the weakness in employment suggests that the Delta variant is now weighing on domestic demand, while its spread across South-East Asia, and the resulting factory closures, means that supply shortages could get even worse too.
Paul Ashworth Chief North America Economist
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US Economics Weekly

Powell gets the nod; GDP growth rebounding

The announcement on Monday morning that President Biden would nominate Jerome Powell for a second term as Fed Chair was largely as expected, although the unexplained delays in making it official may have persuaded some in the markets that Biden was leaning toward picking Lael Brainard instead. As far as monetary policy goes, Powell and Brainard hold very similar, largely dovish, views. Elsewhere, as a result of the flurry of economic data releases ahead of the Thanksgiving Holiday we have raised our fourth-quarter GDP growth forecast to 6.5% annualised, from 4.0%.

24 November 2021

US Data Response

Durable Goods, Adv. Trade (Oct.), GDP (Q3 2nd Est.)

The 0.5% fall in durable goods orders was not as bad as it looked, given that it was entirely due to a fall in volatile aircraft orders. But the bigger news this morning was the huge 10.7% m/m surge in exports in October, which is why we now estimate that GDP growth will accelerate from 2.1% annualised in the third quarter to more than 5% in the fourth, well above our previous forecast of a rise to 4%.

24 November 2021

US Employment Report Preview

Slowdown ahead

We expect non-farm payrolls to have risen by a solid 500,000 in November, but the growing risk of a winter COVID wave and a dwindling supply of available workers look set to weigh on employment growth soon.

24 November 2021

More from Paul Ashworth

US Data Response

Employment Report (Aug.)

The well-below consensus 235,000 gain in non-farm payrolls in August suggests that the Delta variant is beginning to weigh on the economy, with leisure & hospitality employment unchanged on the month. Even allowing for the fact that first estimates for August often disappoint on the downside, the extent of the slowdown in jobs growth all-but rules out any tapering announcement at this month's FOMC meeting and, if this weakness persists, then it could be pushed into early next year.

3 September 2021

US Economics Weekly

Delta spreads; consumption slows; Powell stalls

The Delta-variant linked surge in coronavirus cases continues and has now spread well beyond just one or two southern states. Moreover, even in those southern states, particularly Florida, new case numbers remain close to record highs. Somewhat surprisingly, although more than 60% of adults national are fully vaccinated, hospitalisations are also very elevated and are not far off the record high reached at the start of this year.

27 August 2021

US Economics Update

New fiscal stimulus likely to be underwhelming

The bipartisan infrastructure deal, which could be passed by end-September, would provide no meaningful boost to the economy over the next couple of years. The $3.5trn spending package that Democrats aim to pass via reconciliation later this year could provide more stimulus, but we suspect that spending would be largely offset by tax increases and there is a strong possibility that centrists, in not just the Senate but the House too, will refuse to support it.

25 August 2021
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