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The increase in the Conference Board measure of consumer confidence to 103.0 in September, from 101.3 suggests that lower gasoline prices trumped the fading impact from the financial market turmoil a month ago. … Conference Board Consumer Confidence …
29th September 2015
External deflationary pressure from the strong dollar and lower commodity prices will continue to keep both headline and core inflation unusually low in the shortterm . The strong dollar's downward pressure on non-energy import prices has pushed core …
This week it will be uncertainty over fiscal policy and a possible Federal government shutdown that dominates the headlines. Congress needs to pass a continuing spending resolution by the end of September to keep the Federal government open beyond this …
25th September 2015
GDP growth is now on track for a solid 2.5% gain in 2015. We had previously anticipated that growth would accelerate to nearer 3.0% in 2016 but, given the weakness of global demand and the dollar’s surge, we now forecast another 2.5% increase. In 2017, …
24th September 2015
Our econometric model points to a 200,000 increase in non-farm payrolls in September. We expect the unemployment rate to be unchanged at 5.1%. With the job openings rate comfortably at a record high and the net proportion of households saying that jobs …
The 2.0% m/m decline in durable goods orders in August was a lot better than we were expecting, but principally because the drop back in the volatile transportation category was smaller than anticipated. More generally, although equipment investment …
The latest US financial accounts show that the Fed’s reluctance to raise interest rates from near-zero is not because the central bank fears that it could trigger a debt crisis, either in the US or in other countries. … Dollar debt not the reason for the …
18th September 2015
The more the Fed procrastinates, the more we get the feeling that officials are fooling themselves into thinking that, if they only just wait a little longer, all the uncertainty will clear up and they can raise interest rates with no danger of making a …
Despite raising its GDP growth and core inflation forecasts for this year and lowering its unemployment rate forecast for this year, the Fed opted to leave its key policy rate unchanged at 0.0% to 0.25% today. As far as our own forecasts are concerned, we …
17th September 2015
The 0.1% m/m decline in headline CPI inflation in August was partly due to the renewed decline in gasoline prices, but even core prices increased by only 0.1% m/m, suggesting that underlying inflation remains muted. Nevertheless, once the impact of the …
16th September 2015
The August retail sales and industrial production reports highlight the continued divergence between a strong domestic economy led by healthy consumer spending and weakness in the export-orientated factory sector, which is being weighed down by the strong …
15th September 2015
Although the slump in the University of Michigan consumer confidence index to a 12-month low of 85.7 in September, from 91.9, left it well below the consensus forecast at 91.1 it was almost exactly in line with our own 85.0 projection. As we explained in …
11th September 2015
The decline in the unemployment rate to only 5.1% in August means that the Fed has arguably already achieved the full employment part of its dual mandate. If there is still any slack left in thel abour market, July’s Job Opening and Labour Turnover (JOLT) …
The odds of the Fed hiking interest rates at next week’s FOMC meeting, which concludes on Thursday, are close to 50-50. The cumulative improvement in the economy over the past few years means that it is almost impossible to justify interest rates still …
9th September 2015
With less than two weeks to go until the next FOMC meeting, the odds that the Fed will raise interest rates this month are still close to 50-50. The US economic data remain strong, with the notable exception of the manufacturing sector, which should …
4th September 2015
August’s employment report is fairly mixed and can be used to make a case for or against a rate hike at the upcoming FOMC meeting. As far as we’re concerned, the September meeting is a 50-50 toss up . Nevertheless, even if the Fed doesn’t hike rates …
The struggles of the export-orientated manufacturing sector, which has been hit by the dollar’s surge and the weakness of global demand, have been getting most of the attention this week, but today's data releases revealed that the trade deficit actually …
3rd September 2015
The decline in the ISM manufacturing index to a two-year low of 51.1 in August, from 52.7 in July, reflects the ongoing impact of the dollar’s rapid appreciation and softening global demand. Nevertheless, the much bigger non-manufacturing sector continues …
1st September 2015
This report is only available as a PDF. Click to download. … Employment Report (Jul.) …
We are now assuming that, even if the rally in global stock markets continues, some Fed officials will still want to hold off on raising interest rates until October or even December. A September rate hike isn’t out of the question. But New York Fed …
28th August 2015
Our econometric model points to a more modest 220,000 increase in non-farm payrolls in August, which would probably push the unemployment rate down to 5.2%, from 5.3%. That would seem to meet the Fed’s desire to see “some” further improvement before …
After nearly nine months of weakness, presumably triggered by the dollar's surge and the slump in the mining sector, equipment investment appears to be finally recovering. Headline durable goods orders rose by 2.0% m/m in July, following an upwardly …
26th August 2015
The growth rate of our broad M3 monetary aggregate rebounded to a robust 5.2% y/y in July, suggesting that there is little risk of a sustained deflation or a marked slowdown in real economic growth. The narrower monetary aggregates are still expanding at …
25th August 2015
The rebound in the Conference Board measure of consumer confidence in August more than offset last month’s sharp fall and is consistent with consumption growth remaining healthy in the third quarter. This adds to the evidence that the economy is strong …
Central European bonds and currencies have been remarkably resilient during the recent turmoil in the global financial markets. In contrast, Turkish markets have been hit by fresh concerns about the political situation and a general spike in investor risk …
There are no signs of any major downturn in the US economy, economic growth in China still appears to slowing rather than collapsing and emerging markets are not about to endure a repeat of the 1997/98 Asian crisis. The current bout of market turmoil, if …
24th August 2015
The projections made by Fed officials back in June indicated that they were setting a pretty low bar for hiking interest rates later this year. Nevertheless, despite those low expectations, officials were almost evenly split on whether rates would need to …
21st August 2015
The very muted 0.1% m/m gains in both headline and core CPI in July will certainly give the Fed pause for thought in whether to raise interest rates or not at the next FOMC meeting in mid September. On balance, we still think the Fed will go ahead and …
19th August 2015
After an unexpected surge at the end of the second quarter, inventories are shaping up to be the big wildcard in third-quarter GDP growth. We expect inventories to subtract 0.5% points, with third-quarter GDP growth coming in close to 2.5% annualised. … …
17th August 2015
Last week the markets were very much focused on the potential for a stalling Chinese economy to “export” deflationary pressure to the US, either via the direct impact of a weaker renminbi or through the indirect impact of weaker global commodity prices. …
14th August 2015
The University of Michigan measure of consumer confidence was virtually unchanged in August, and remains consistent with annualised consumption growth remaining close to 3%, or even better, in the third quarter. … UoM Consumer Confidence …
The 0.6% m/m increase in industrial production in July was much higher than the consensus forecast of a 0.3% m/m gain, but it was primarily due to a massive surge in motor vehicle output. The latter looks very much like a distortion that will be reversed …
The 0.6% m/m increase in July's retail sales, which matched the consensus forecast, was solid rather than spectacular. But upward revisions to sales in May and June mean that real consumption growth started the third quarter on a stronger footing than we …
13th August 2015
The risk of a further market-driven slide in the Chinese renminbi and the renewed slump in global commodity prices, triggered by heightened concerns about the state of China’s economy, probably won’t prevent the Fed from beginning to raise interest …
12th August 2015
Ignore the 1.3% annualised rebound in non-farm productivity in the second quarter, which barely reversed the 1.1% decline in the first quarter. The bigger story is the almost unprecedented weakness of productivity, not just since the recession but going …
11th August 2015
A September rate hike is looking more and more like a done deal, even though the incoming economic data have been decidedly mixed of late. … Fed edging closer to first rate …
7th August 2015
The widening in the trade deficit to $43.8bn in June, from an upwardly revised $40.9bn in May, is more or less as the BEA assumed in its GDP estimate and therefore doesn’t point to a revision to the 2.3% annualised increase in second-quarter GDP. … …
5th August 2015
The modest fall in the ISM manufacturing index suggests that the factory sector is continuing to suffer the effects of the dollar’s appreciation. Nonetheless, the survey is still consistent with annualised GDP growth of over 2%. … ISM Manufacturing Index …
3rd August 2015
The Fed's more upbeat tone on economic conditions in the latest FOMC policy statement was a long way from it ringing the alarm bells on a September lift-off. Nevertheless, it still suggests that the Fed could be sufficiently confident about tightening …
Our econometric model points to a 250,000 gain in non-farm payrolls in July, although we suspect that the unemployment rate remained at 5.3%, as the labour force rebounds. … Labour market slack continues to …
30th July 2015
The second-quarter GDP data support the Fed’s more upbeat tone on economic conditions and suggests that the economy could cope with higher interest rates. … GDP (Q2, 1st …
The sharp fall in the Conference Board measure of consumer confidence in July, to 90.9 from 99.8 in June (revised down from 101.4), points to an easing in consumption growth in the second half of the year. Nonetheless, with the labour market strengthening …
28th July 2015
June's durable goods data suggest that the rebound in investment in business and equipment in the second quarter was probably smaller than we expected. Nevertheless, this isn’t enough to prompt us to change our call of a 2.8% annualised rise in …
27th July 2015
This week's FOMC meeting will be uneventful. With the Fed keen to stress that every meeting is "live" and that decisions are based entirely on the incoming data, we wouldn't expect any heavy hints in Wednesday's statement that a September rate hike is …
24th July 2015
We don't anticipate any major changes from the Fed at next week's FOMC meeting, which concludes on Wednesday 29th July. With the Fed keen to stress that every meeting is "live" and that decisions are based entirely on the incoming data, we wouldn't expect …
21st July 2015
After a strong May, economic activity was more mixed in June. Nevertheless, it was still solid enough to re-affirm our view that the economy rebounded robustly in the second quarter. Even after the slight decline in June retail sales, our calculations …
20th July 2015
The unexpected decline in June's retail sales was a disappointment and, more generally, the rebound in underlying sales in the second quarter has been weaker than the turnaround last year, when unseasonably severe winter weather also dampened …
17th July 2015
The 0.3 m/m increase in June's consumer price index, which was partly due to a 3.4%m/m increase in gasoline prices, brought the brief period of "deflation" to an end. The annual inflation rate edged up to +0.1% last month. By early next year it will be …
The 0.3% increase industrial production in June reflects in large part a rebound in the mining sector, which has struggled so far this year. … Industrial Production & Producer Prices …
15th July 2015
Fed Chair Janet Yellen's latest comments don't change our view that the Fed is still on track for a September lift-off. Furthermore, we expect rising wage growth and core inflation to trigger a much more rapid rise in interest rates next year, with the …
