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The “full and comprehensive” trade deal between the US and the UK announced in a rush today by President Donald Trump and PM Keir Starmer is no such thing. As Trump admitted in his press conference, the “final details” still need to be “written up in the …
8th May 2025
Fed offers no hint that a rate cut is coming any time soon The minimalist statement issued by the Fed at the conclusion of the FOMC meeting gave no hint that it was considering a further cut to the fed funds rate, at least not any time soon. As was almost …
7th May 2025
Pharmaceuticals imports push trade deficit to new record high The widening in the trade deficit to a new record high in March was driven entirely by imports of pharmaceutical products as firms looked to front-run tariffs. This was broadly in-line with the …
6th May 2025
Service sector shrugs off tariff uncertainty The rebound in the ISM services index to 51.6 in April, from 50.8, is another illustration that most firms are able to shrug off the tariff chaos. Admittedly, at 51.3, our weighted composite of the …
5th May 2025
This webpage has been updated with additional analysis since first publication. Labour market remains resilient even after tariff announcements The healthy 177,000 rise in non-farm payrolls in April and unchanged unemployment rate will reassure the Fed …
2nd May 2025
Manufacturing activity holding up The small fall in the ISM manufacturing index in April suggests that, while tariffs are weighing on the economy, they are not crushing it. And although the prices paid index is still some way below its pandemic peak, it …
1st May 2025
Inflation slows, but worst yet to come The almost unchanged level of core PCE prices in March is welcome news but, given the data precede the implementation of broad-based tariffs, core inflation will inevitably rebound sharply in the coming months. …
30th April 2025
GDP dragged down by pre-tariff import surge & DOGE cuts The 0.3% annualised decline in first-quarter GDP was entirely due to a pre-tariff 41.3% annualised surge in imports, with net exports subtracting a massive 4.8% points from GDP. This surge now …
Pre-tariff import boom points to sizeable Q1 GDP contraction The advance economic indicators revealed a massive surge in consumer goods imports in March, as firms raced to beat the imposition of reciprocal tariffs in early April. As a result, we now …
29th April 2025
Boeing demand boosts orders The jump in durable goods orders in March was driven entirely by a large rise in orders received by Boeing. Excluding transport, core goods orders flatlined. With the post-strike boost from the restart in production at Boeing …
24th April 2025
Tariff hit yet to come The fall in industrial production in March was not as bad as it looks given that it was driven solely by a large weather-related drop in utilities output. Manufacturing enjoyed a strong first quarter with output rising by 5.1% …
16th April 2025
Consumption growth rebounds following weather-related weakness A presumably temporary pre-tariff surge in motor vehicle sales drove the strong 1.4% m/m increase in retail sales in March. But there was also a big 3.3% m/m rebound in building materials …
The tariff exemptions reported in the dead of night by the CBP on various electronics goods, including smartphones, semiconductors, electronic circuits and TVs, represent a partial de-escalation of President Trump’s trade war with China. The 20 product …
12th April 2025
Stagflation on consumers’ minds The further fall in the University of Michigan Consumer Sentiment Index in April along with the rise in both one- and five-year inflation expectations, suggests that the tariff-related fears which had soured sentiment over …
11th April 2025
One step forward after two steps back and with a mountain ahead Following the favourable CPI and PPI data, we estimate that the core PCE deflator rose by a below-target 0.05% m/m in March. Even taking into account a likely upward revision to the rise in …
Core PCE prices on track for below-target 0.11% gain The unexpectedly small 0.06% m/m rise in the core CPI in March was partly due to steep falls in hotel prices and airline fares, which reflect both weakening domestic demand and the recent drop in …
10th April 2025
Although President Donald Trump was able to resist the stock market sell-off, once the bond market began to weaken too, it was only a matter of time before he folded on his eye-wateringly high tariffs. Trump has announced an immediate 90-day pause, during …
9th April 2025
Payrolls brings better news The bumper 228,000 rise in non-farm payrolls in March offers some welcome good news amid the escalating global trade war, showing that the labour market remains healthy despite the drag from DOGE-led federal job cuts. We expect …
4th April 2025
Services sector weakens but not a disaster The fall in the ISM services index in March shows that the weakness isn’t isolated to the manufacturing sector. Our weighted average ISM index is consistent with the economy contracting, although it has …
3rd April 2025
Gold playing a key role in the slight narrowing of the trade deficit The narrowing of the trade deficit in February was driven by stronger exports, mainly of non-monetary gold, while imports remained at record levels, as businesses continued to rush …
Fall suggests manufacturing renaissance remains elusive The slight dip in the ISM manufacturing index in March suggests that, rather than triggering a reshoring factory renaissance, the uncertainty surrounding President Trump’s tariff threats are …
1st April 2025
Inflation too hot and spending too cold The third consecutive above-target gain in core PCE prices in February, of 0.37% m/m, reinforces our view that the Fed is unlikely to cut interest rates this year. Admittedly, officials are likely to be concerned by …
28th March 2025
Trump imposes 25% tariff on auto imports Following media reports at the start of this week that product-specific tariffs would be deferred, President Donald Trump has changed tack once again and announced that all finished motor vehicle imports will be …
26th March 2025
Tariff effects help lift core orders Stronger orders for primary metals and fabricated metal products in February suggest that tariff effects helped to drive up core durable goods orders last month, while transportation orders also did better than we …
Fed continues to expect two rate cuts this year, while slowing QT to a crawl Although the FOMC stuck to its median projection for two interest rate cuts this year, some officials now share our view that further loosening is unlikely and we continue to …
19th March 2025
Rise in output the calm before the tariff storm The rise in industrial production in February should further soothe concerns that the economy is on the cusp of recession. Nonetheless, with production supported by rebounds in motor vehicle and aerospace …
18th March 2025
Consumers not completely collapsing under the weight of policy uncertainty after all Although retail sales only edged up in February, the much larger rebound in control group sales – which feeds into the BEA’s consumption estimate – is something of a …
17th March 2025
Policy concerns weigh heavily on sentiment The plunge in the University of Michigan Consumer Sentiment Index in March, paired with the surge in inflation expectations, indicates that consumers’ concerns about the impact of the Trump administration’s …
14th March 2025
CPI & PPI point to 0.35% m/m increase in core PCE While final demand and core PPI both surprised to the downside in February, the price increases in the components which matter for the PCE deflator were on the whole hotter than we had anticipated. As a …
13th March 2025
Not as good as it looks The softer 0.23% m/m rise in core CPI in February is not as encouraging at it looks, as the components which feed into the Fed’s preferred PCE price index rose more sharply. While it will depend a lot on the PPI data tomorrow, our …
12th March 2025
Labour market still in decent shape The modest 151,000 rise in non-farm payrolls in February and 0.1%-point rise in the unemployment rate to 4.1% confirms the economy started the year soft but is not plummeting towards a recession. Some of those fears may …
7th March 2025
Trade deficit hits all-time high as importers continue to rush to beat tariffs The ballooning of the trade deficit to a record high of $131.4bn in January once again stemmed from a huge surge in imports as businesses rushed to fast-track orders before new …
6th March 2025
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
Services sector holding up despite policy uncertainty After the slew of weaker activity and survey data in recent weeks, the small rise in the ISM services index in February should provide some reassurance that the floor is not falling from under the …
Prices already surging ahead of tariffs The fall in the ISM manufacturing index in February likely marks the beginning of the end of the recent mini renaissance, as the reality of the disruption to the sector caused by tariffs (including retaliatory …
3rd March 2025
Favourable base effects pull down core inflation The 0.28% m/m rise in core PCE prices in January was a big improvement on last year’s 0.5% m/m gain, but the 2.6% annual core inflation rate is still too hot for the Fed’s liking and, with inflationary …
28th February 2025
Durable goods orders rebound thanks to strong Boeing orders The increase in durable goods orders in January was due to the volatile transport component, while core orders were unchanged. Although underlying capital goods shipments fell, business …
27th February 2025
Fed in no hurry to resume cutting rates The minutes of the Fed’s late-January policy meeting underline that, having cut rates by a cumulative 100bp, officials are in no hurry to resume loosening monetary policy, even though most still thought the current …
19th February 2025
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Industrial output edged higher The rise in industrial production in January is not as good as it looks as it was driven by a weather-related surge in utilities and a further post-strike recovery in aerospace & parts output. Industrial production rose by …
14th February 2025
A weak start to the year The large fall in control group retail sales in January, together with the timelier data showing a slump in vehicle sales, suggests that real consumption fell last month. While weather effects were probably partly to blame, that …
Reciprocal tariffs a bigger deal than universal tariff President Trump appears to have abandoned the idea of imposing a flat universal tariff of 10% or 20% on imports from all other countries. But the broad criteria that will be used to assess his new …
13th February 2025
PPI brings better news on core PCE inflation Final demand PPI increased by a bigger-than-expected 0.4% m/m, but the components that feed into the Fed’s preferred PCE price measure were, on the whole, very tame. As a result, we now estimate that core PCE …
Another big Jan price surge takes rate cuts off the table this year The 0.45% m/m increase in core CPI in January will, after the spike at this time last year, add to the impression that the price data have a residual seasonality problem. Assuming the …
12th February 2025
Powell gives little indication of rate cuts this year Fed Chair Jerome Powell stuck to the line that the Fed was in no hurry to adjust its policy stance in his semi-annual testimony to Congress today. Given that inflation remains above target and the …
11th February 2025
Inflation expectations surge due to tariffs The University of Michigan Consumer Sentiment Survey for February showed a decline in the headline index alongside a sharp rise in inflation expectations, suggesting that consumers are increasingly concerned …
7th February 2025
The softer 143,000 gain in payrolls in January is nothing to be concerned about following the upward revisions to payrolls in November and December, which left the three-month average gain at a near-two year high of 237,000. That strength, together with a …
Survey evidence remains soft The fall in the ISM services index to 52.8 in December lends some support to our view that GDP growth will slow in the next couple of quarters, albeit with the caveat that the surveys have proved to be a poor guide to GDP in …
5th February 2025
Trade deficit swells as businesses front-run tariffs The trade deficit ballooned to a 3-year high of $98.4bn in December, up from $78.9bn, as imports surged by 3.5% and exports fell by 2.6%. The strength of imports appears largely driven by businesses …
Manufacturing recovery to prove short-lived The ISM manufacturing index finally rose back above the theoretical no-change level of 50.0 in January, but the trade war kicking off across the continent means that the recovery is likely to be short-lived. …
3rd February 2025
