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Spender of last resort

With China’s economy hampered by its zero-covid lockdowns, and Europe’s economy suffering because of the massive surge in imported energy prices caused by the war in Ukraine, the American consumer has once-again emerged as the world’s spender of last resort.
Paul Ashworth Chief North America Economist
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US Economics Update

Easing shortages to push down core goods inflation

There has been little sign that price pressures have eased yet, but the survey evidence suggests that supply shortages continue to improve. That reinforces our view that core goods inflation will fall over the second half of the year.

29 June 2022

US Economics Update

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.

29 June 2022

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

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US Chart Book

Economy powering ahead

The strength of the hard activity data for April refutes the recent message from financial markets that the economy is at risk of imminent recession. The solid gain in control group retail sales, together with upward revisions to past months leaves the underlying trend in consumer spending looking much stronger. Meanwhile the continued rebound in manufacturing output, in particular the recovery in vehicle output to the pre-pandemic level, illustrates how the gradual easing of supply shortages is supporting a rebound in production. With signs that core inflation is still running far too hot, the continued strength of economic activity supports the Fed’s decision to press ahead with 50bp rate hikes at the next couple of FOMC meetings. Nevertheless, we still expect a drop back in inflation later this year, alongside signs of a slowdown in economic activity will prompt the FOMC to shift back to 25bp hikes by the fall.

18 May 2022

Canada Data Response

Consumer Prices (Apr.)

CPI inflation edged up to a new cyclical high of 6.8% in April, from 6.7%, and, together with the more marked increases in core inflation, that almost guarantees the Bank of Canada will hike its policy rate by another 50bp next month.

18 May 2022

US Data Response

Retail Sales (Apr.)

Never bet against the US consumer has always been a good adage to bear in mind throughout my 20-plus years in the markets. Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be single-handedly keeping the global economy afloat again.

17 May 2022
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