US Economics Update Surge in productivity growth a key upside risk The acceleration in productivity growth suggests the economy’s supply side is responding to the tightness of labour markets and the tax cuts introduced early last year. With investment growth slowing... 2nd May 2019 · 1 min read
US Economics Update GDP growth still set to slow Neither the unexpectedly strong 3.2% gain in first-quarter GDP nor the outsized 0.7% m/m increase in real consumption in March changes our view that the US economy will experience a marked slowdown in... 2nd May 2019 · 1 min read
US Economics Update Fed downplays drop off in core inflation Although the FOMC left the target for the fed funds rate unchanged at between 2.25% and 2.50% today, as expected, it unveiled a slightly unexpected 5bp cut in the interest on excess reserves (IOER)... 1st May 2019 · 1 min read
US Economics Update What explains the plunge in core inflation? In contrast to the sudden weakness in core inflation a few years ago, the latest plunge in core PCE inflation cannot be explained by idiosyncratic factors. Instead, it reflects a moderation in unit... 1st May 2019 · 1 min read
US Economics Update Low level of jobless claims too good to be true We are sceptical that the decline in initial jobless claims to a 50-year low is providing a reliable guide to current labour market conditions. In recent years, a number of states have made it more... 17th April 2019 · 1 min read
US Economics Update Inventories to weigh on GDP growth later this year A surge in business inventories appears to have boosted first-quarter GDP, but the now elevated inventory-to-sales ratio suggests that inventories will be a drag over the remainder of this year, which... 16th April 2019 · 1 min read
US Economics Update Lower rates won’t prevent economic slowdown The sustained drop in Treasury yields since early November is one reason why we have upgraded our economic forecasts for 2020, but we do not think that will be enough to prevent economic growth... 12th April 2019 · 1 min read
US Economics Update Surveys add to evidence of labour market slowdown The latest NFIB and JOLT surveys suggest that investment growth is set to slow and provide further evidence that labour market conditions are no longer tightening. 9th April 2019 · 1 min read
US Economics Update Could the Fed’s interest rate projections be a mistake? The Fed began publishing interest rate projections submitted by FOMC participants as far back as 2012, but in the past seven years only one maverick official has ever forecast a cut in interest rates... 8th April 2019 · 1 min read
US Economics Update Yield curve not the only recession indicator For all the focus on the Treasury yield curve, other leading indicators of activity are not yet signalling that a recession is imminent. But their recent deterioration does suggest that the risks are... 28th March 2019 · 1 min read
US Economics Update Monetary Indicators Monitor (Feb.) The pick-up in broad money growth to a six-year high in February is not necessarily a positive for the economy because it is a lagging indicator. But it does at least suggest the Fed’s balance sheet... 27th March 2019 · 1 min read
US Economics Update Fed signals extended patience & announces end of QT The Fed’s revised economic projections, which now imply no rate hikes this year, together with the announcement that it will halt its balance sheet run-down in September, came as a positive surprise... 20th March 2019 · 1 min read
US Economics Update China trade deal won't prevent economic slowdown The rumoured trade deal with China won’t in itself provide much boost to the economy even if it includes the removal of the punitive tariffs levied by both sides in the past year. We continue to... 4th March 2019 · 1 min read
US Economics Update Fed unlikely to hike rates again this cycle Fed Chair Jerome Powell reiterated the FOMC’s “patient” mantra in his testimony to Congress today, but we think the Fed is already done hiking interest rates. With GDP growth slowing below potential... 26th February 2019 · 1 min read
US Economics Update Economic growth slowing below trend The weak incoming data mean that economic growth is on track to slow below its 2% potential pace this quarter. That kills off any remaining prospect of further Fed rate hikes and, with economic growth... 26th February 2019 · 1 min read
US Economics Update Smaller tax refunds a risk to first-quarter GDP Even if there are no further delays to the IRS processing tax refunds, we think households are on track to receive perhaps $30bn less in the first quarter than last year, equivalent to 0.7% of... 12th February 2019 · 1 min read
