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.

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 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

US Chart Book

Growth slowing even before potential Delta drag

The 1.1% m/m fall in retail sales last month illustrates the worsening drag from the sharp slowdown in real income growth, as earlier fiscal support fades and surging prices erode purchasing power. This suggests real consumption growth could be even weaker in the third quarter than the 3% annualised pace we had pencilled in. Moreover, the details suggest that the July retail sales data came too early to capture much impact from the continued rapid spread of the Delta coronavirus variant, which contributed to a renewed plunge in consumer confidence in early August. The upshot is that, although the July payrolls figures suggested that labour shortages won’t be as big a drag as we had previously feared, economic growth still looks likely to slow more sharply over the second half of the year than most anticipate.

18 August 2021

Canada Economics Weekly

Exports heating up as housing cools

There was more evidence that the housing market is cooling this week, with home sales slipping to 12-month lows in seasonally adjusted terms in both Toronto and Vancouver. The good news, however, is that although the housing boom is going into reverse, there are signs of other GDP components stepping up to the plate – with exports soaring in June.

6 August 2021
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