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Economy still bending rather than breaking

Evidence that economic growth has rebounded in the second quarter, alongside the likelihood of a further big rise in consumer prices in June, suggest that the Fed will press ahead with another super-sized 75bp rate hike at the next FOMC meeting in late July.
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Paul Ashworth Chief North America Economist
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US Data Response

Industrial Production (Jul.)

The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the likely drag on manufacturing from the impending global economic downturn means that the resilience of production may not last for long.

16 August 2022

US Economics Weekly

More good news on inflation coming soon

The drop back in CPI inflation in July wasn’t enough alone to convince Fed officials to change their plans for interest rate hikes. But we expect the better news on inflation to continue over the coming months, which will eventually persuade the Fed to halt its tightening cycle early next year.

12 August 2022

US Economics Update

Is there really such thing as a ‘jobful’ recession?

While history shows that recessions can begin even while employment is still rising, the current rate of payroll employment growth is far too strong to be consistent with an economic downturn. By the same token, although we think an outright contraction will be avoided, any recession over the next couple of years would almost certainly coincide with a decline in employment and rise in the unemployment rate.

11 August 2022

More from Paul Ashworth

US Economics Update

Fed to hike by 75bp this week, in race back to neutral

Last Friday, we warned in our Data Response to May’s CPI report that the unexpected rise in headline inflation opened the door to a 75bp rate hike by the Fed this Wednesday. Media reports this afternoon suggest the Fed will indeed hike by 75bp at this week’s FOMC meeting and there is a good chance that the Fed will follow up with a second 75bp hike in July, taking the fed funds target range to between 2.25% and 2.50%, which is in line with the Fed’s estimate of neutral.

14 June 2022

US Economics Weekly

Reports of the consumer’s death greatly exaggerated

In contrast to reports from individual retailers, the aggregate data show that retail inventories are still lean, while the very strong May CPI data revelated no signs whatsoever of any discounting.

10 June 2022

US Economics Weekly

Energy prices keep on rising

The 390,000 gain in payrolls employment last month demonstrates that the real economy is holding up well, although the further rise in energy prices will put households under even more pressure.

3 June 2022
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