US Economics Update Will further Fed hikes trigger a renewed surge in the dollar? Although we expect the Fed to raise interest rates faster than most anticipate over the next two years, the resulting appreciation of the dollar should be much more modest than last year. Following a... 20th April 2016 · 1 min read
US Economics Update Will the Fed let inflation overshoot? Inflation is going to overshoot the Fed’s 2% target, let’s be clear. While we expect Fed officials to be fairly relaxed about that, however, we don’t think it means interest rates won’t rise at all... 19th April 2016 · 1 min read
US Economics Update We need to talk about Q1 GDP growth Thanks to a markedly weaker gain in consumption than we were previously expecting, it now appears that first-quarter GDP growth was no more than 1% annualised. Following on from the 1.4% gain in the... 7th April 2016 · 1 min read
US Economics Update Strength of low-paid hiring may be holding down average wages The recent weakness of wage growth over the past few months is partly explained by a deterioration in the quality of jobs being created, which is also reflected in a surge in low-skilled labour force... 7th April 2016 · 1 min read
US Economics Update Will the participation rate continue to rebound? The recent surge in labour force participation has been concentrated among low-skilled workers, which may be artificially depressing average hourly earnings. But with this trend unlikely to last and... 31st March 2016 · 1 min read
US Economics Update Monetary Indicators Monitor (Feb.) We are not overly concerned by the slowdown in the annual growth rate of our broad M3 money measure to a five-year low of 3.5% in February, particularly not when bank loans are still expanding at more... 30th March 2016 · 1 min read
US Economics Update Does the decline in profits mean a recession is coming? The 11.5% decline in corporate profits last year, which included a 7.8% decline in the fourth quarter alone, doesn’t necessarily mean that a recession is imminent. Admittedly, profits usually begin to... 29th March 2016 · 1 min read
US Economics Update Fed dovish today, but should turn more hawkish later The Fed opted to leave its key policy rate unchanged at 0.25% to 0.50% today, while also lowering its projections for the pace of future rate hikes. Nevertheless, as inflation continues to rise and... 16th March 2016 · 1 min read
US Economics Update Fed unlikely to follow others in adopting negative rates Although a number of other central banks have now adopted negative policy rates, the chances of the Fed following suit are pretty small. Even if US economic conditions deteriorated, we suspect that... 16th February 2016 · 1 min read
US Economics Update Yellen sticks to view that interest rates will rise gradually Fed Chair Janet Yellen’s testimony to Congress today revealed that, while the FOMC might not be ready to raise interest rates for a second time in March, she still anticipates a “gradual” series of... 10th February 2016 · 1 min read
US Economics Update Inflation expectations – are they really falling? The slump in market-based breakeven inflation rates has raised fears that falling inflation expectations could trigger a deflationary spiral in the US. But breakeven rates are measures of inflation... 8th February 2016 · 1 min read
US Economics Update Productivity stagnation is biggest medium-term threat Putting aside the short-term threats from slower global economic growth, the stronger dollar and tightening financial conditions, the biggest medium-term threat to the living standards of Americans is... 4th February 2016 · 1 min read
US Economics Update Demand for business loans slumps The Fed’s latest Senior Loan Officer Survey points to a fairly sharp drop-off in the growth rate of loans to businesses, which suggests that investment will remain muted in the first half of this year... 1st February 2016 · 1 min read
US Economics Update Fed doesn't completely rule out March rate hike The Fed certainly didn't rule out a March rate hike completely in the FOMC statement released today, but it was notable that it was no longer willing to describe the risks to the outlook as balanced. 27th January 2016 · 1 min read
US Economics Update Did the Fed err in raising interest rates? The renewed turmoil in global financial markets together with the downward revisions to estimates of fourth-quarter GDP growth in the US have prompted claims that the Fed made a serious policy error... 27th January 2016 · 1 min read
US Economics Update Monetary Indicators Monitor (Dec.) The growth rate of our M3 broad money measure slowed to a three-and-a-half year low of 4.1% in December, but the slightly narrower M2 measure increased by a solid 6.0% last year, while bank loans... 26th January 2016 · 1 min read
