Filtered by Subscriptions: US Economics Use setting US Economics
We are unconcerned by the more mixed data for April since the upward trend in sales and production is still firmly in place. More generally, the improving survey evidence points to a pick-up in activity over the coming months and we still expect …
19th May 2014
The fall in consumer confidence in May comes at the end of a week in which we also received weak retail sales and industrial production numbers. But we think that the underlying trend in economic activity is upwards, meaning that it shouldn’t be long …
16th May 2014
A widespread pick up in price pressures is now underway, which we think will result in both the CPI and PCE measures of core inflation rising above the Fed’s 2% target. Meanwhile, the fall in industrial production in April is a blip in the upward trend. …
15th May 2014
April’s retail sales release suggested that GDP growth in the first quarter was a bit stronger than previously thought, but that the rebound in the second quarter may turn out to be a little smaller than hoped. … Retail Sales (Apr …
13th May 2014
The rapid expansion in bank loans since the turn of the year is a sure sign that the economic outlook is brighter than the stagnation in first-quarter GDP growth suggested. Loans to businesses are increasing at the fastest pace, which bodes well for …
12th May 2014
A few commentators have suggested that the weakness in first-quarter GDP, which may even have contracted slightly, could be due to the Fed's decision late last year to begin tapering its monthly asset purchases. Admittedly, the timing fits, but otherwise …
6th May 2014
The modest decline in the trade deficit to $40.4bn in March, from $41.9bn, was a smaller narrowing than the BEA had assumed in its initial estimate of first-quarter GDP growth. Accordingly, when added to the downward revision we anticipate to …
The Fed's latest Senior Loan Officer Survey illustrates the remarkable divergence between bank loans to businesses, which have increased by nearly 9% over the past year, and bank residential mortgages, which have contracted by more than 4%. … Fed's survey …
5th May 2014
Even if China endured a financial crisis and a recession, the hit to the US economy would probably be fairly small. China is just not that important to America’s banks, businesses and investors. We are not expecting events in China to be anywhere near …
The above-consensus 288,000 increase in non-farm payrolls in April and the corresponding drop in the unemployment rate to a four-and-a-half-year low of 6.3% underline why the markets and the Fed were unconcerned by the near-stagnation in first-quarter GDP …
2nd May 2014
The further rise in the ISM manufacturing index to a four-month high of 54.9 in April, from 53.7, illustrates that the factory sector is still getting back to normal after the earlier weather-related disruptions. … ISM Manufacturing Index …
1st May 2014
As expected, the near-stagnation in first-quarter GDP growth wasn't enough to prevent the Fed from tapering its asset purchases by an additional $10bn, to $45bn per month, at the FOMC meeting that concluded today. … Fed continues with gradual QE …
30th April 2014
The unexpectedly weak 0.1% annualised gain in first-quarter GDP growth, which was markedly below the consensus forecast of a 1.2% gain, was principally due to the unusually severe winter weather. As the weather has returned to seasonal norms, we have …
The slight drop in the Conference Board's measure of consumer confidence, to 82.3 in April from 83.9, appears to have been due to weaker labour market conditions. As this decline was trivial and contrasts with other evidence, we still expect consumption …
29th April 2014
The apparent crumbling in the housing recovery has, at least temporarily, removed a valuable support to GDP growth. But the wider economic recovery will carry on regardless and it may not be long before residential investment once again starts adding to …
28th April 2014
Although durable goods orders rose by a decent 2.6% m/m in March, the details of the survey suggest that the growth rate of business investment in equipment slowed down to roughly 2.0% annualised in the first quarter. That supports our view that, in part …
24th April 2014
The monthly gains in payroll employment may soon rise above the 200,000 that have been the norm for most of the past year. This would be partly due to some catch-up after the recent extreme winter weather and partly due to a strengthening in economic …
The two-day FOMC meeting that concludes next Wednesday (30th April) is likely to be a quiet affair for two reasons: The Fed made key changes to its forward guidance at the last meeting in mid-March. The upcoming meeting is also likely to be one of the …
23rd April 2014
The slowdown in trend productivity growth, which began a decade ago, is principally due to two structural factors; the fading boost from the IT revolution and the aging of the population. The financial crisis may have triggered a temporary decline in …
22nd April 2014
The incoming data over the past few weeks suggest that activity and employment rebounded in March, as the weather-related distortion that affected the winter months began to unwind. Our latest calculations indicate that first-quarter GDP growth slowed to …
Looser credit conditions, lower loan rates and the stronger economic outlook have continued to boost bank lending to businesses. This supports our view that business investment growth will accelerate both this year and next. … Monetary Indicators Monitor …
21st April 2014
The more data we see on economic activity in March, the more we're reassured that the drop-off in the preceding few months was almost entirely due to the unseasonably severe winter weather. … Economy shrugging off winter …
With industrial production rising at a decent pace in March, the economy is now starting to show its true colours after the weakness triggered by the bleakest of winters. There is scope for production to rise rapidly in the coming months too. … …
16th April 2014
The rebound in CPI inflation to 1.5% in March, from 1.1%, is partly due to the reversal of the base effects that pushed it down in February. Nonetheless, more permanent trends will lift both headline and core inflation close to 2.0% before too long. … …
15th April 2014
The leap in retail sales in March is mainly due to the unwinding of the distortion caused by the unusually bad weather in previous months. This means first-quarter real consumption growth was probably a little stronger than we had been expecting. … …
14th April 2014
The markets have begun to heed the Fed’s bizarre warnings to ignore its own interest rate projections. But they shouldn’t be so trusting, especially when the minutes of the mid-March FOMC meeting revealed a growing split between those members that believe …
The rise in consumer confidence in April reflects a reversal of the earlier weather-related hit to confidence, as well as record high stock markets and improving labour market conditions. These numbers suggest that consumption growth got off to a decent …
11th April 2014
The latest round of jobs data released over the past few days would appear to refute Fed Chair Janet Yellen's recent claims that there is still considerable slack in the labour market. … Latest labour market data refute Yellen's slack …
8th April 2014
The rapid run-up in the price of farmland appears to be over. We suspect that the slowdown in the growth rate of farmland prices last year will develop into an outright decline in prices this year, at least in the corn belt that saw the most dramatic rise …
7th April 2014
The solid 192,000 increase in non-farm payrolls in March, along with the bounce back in average weekly hours worked to a four-month high of 34.5, from 34.3, confirms that the recent spate of weakness was nearly all due to the severe winter weather. … …
4th April 2014
There are finally reasons to expect a more sustained pick-up in business investment this year and next. Admittedly, economists have been forecasting that business investment would become a driving force of the recovery pretty much since that recovery got …
3rd April 2014
The unexpected widening in the monthly trade deficit to a five-month high of $42.3bn in February, from $39.3bn, suggests that first-quarter GDP growth was only 1.5% annualised, lower than our previous estimate of 2.0%. … International Trade …
The rebound in auto sales in March and the rush to sign up for health insurance in recent weeks means that the slowdown in real consumption growth in the first quarter may not be as marked as previously looked likely. Consumption growth will probably …
2nd April 2014
The trivial increase in the ISM manufacturing index to 53.7 in March, from 53.2, suggests that the sector is slowly recovering from the weather-related disruption at the start of the year. … ISM Manufacturing Index …
1st April 2014
The fall in PCE inflation to just 0.9% in February probably marks the low point in this cycle and we suspect that the Fed will be surprised by how fast inflation rebounds over the next 18 months. … PCE inflation won't be this low for …
31st March 2014
While a handful of banks “failed” the Fed’s latest stress tests, the sector as a whole has enough capital to continue lending to domestic businesses and households even if it had to absorb further legal settlements or any losses stemming from events in …
If there is little prospect of getting the long-term unemployed, who account for an unusually large share of the overall jobless rate, back into work then wage growth could accelerate faster than the Fed currently expects. That might eventually prompt a …
27th March 2014
The weather didn't quite return to seasonal norms in March, but it was nowhere near as bad as it was between December and February. We have pencilled in a gain of 200,000 in payroll employment in March, even though the Midwest and Northeast were hit by …
The 2.2% m/m rebound in durable goods orders in February, which was more than double the consensus estimate of a 0.8% m/m gain, was largely due to a big bounce back in the transportation component. Unfortunately, the details of the report suggest that the …
26th March 2014
The rebound in the Conference Board measure of consumer confidence to a six-year high of 82.3 in March, from 78.3, reflects mainly a reversal of the weather effects from a month ago. With equity prices close to record highs and labour market conditions …
25th March 2014
The current account and Federal budget deficits have narrowed markedly over the past few years, indicating that the US economy is the closest it has been to both internal and external balance in more than a decade. This adjustment is even more remarkable …
A rebound in medical inflation from recent 40-year lows will add to a wider strengthening in price pressures to push core PCE inflation above the Fed’s 2% target next year. This may prompt the Fed to increase interest rates a bit sooner and a bit faster …
24th March 2014
We didn't think new Fed Chair Janet Yellen's admission that "considerable period" meant six months or so warranted the subsequent equity sell-off. It simply confirmed what we already knew, that the first rate hike would be coming in mid-2015. What we …
As expected, the Fed continued to taper its asset purchases and dropped its explicit unemployment rate threshold, reverting to a more qualitative form of forward guidance in today's policy statement. What we hadn't anticipated is that FOMC participants …
19th March 2014
As a lot of the surge in food prices in February is due to the extreme weather, it is unlikely to be sustained. Nonetheless, the risks to our forecast that food price inflation will climb from 1.4% in February to around 2.0% by the end of next year now …
The surge in bank lending to businesses in February could be an early sign that small firms are becoming more optimistic. Either way, the growth rate of bank lending will rise further this year as the economy continues to strengthen. … Monetary …
18th March 2014
The fall in CPI inflation to only 1.1% in February, from 1.6%, won’t influence tomorrow’s policy decision by the Fed, as it is solely due to base effects that will be reversed in March. Core inflation remained at 1.6% and there are even some tentative …
The slump in average weekly hours worked over the past few months is undoubtedly weather-related and we expect to see a bounce back in the spring. … There is no hidden rot in the jobs …
17th March 2014
The rebound in industrial production in February suggests that the economy is waking up after hibernating during the past few months of unusually bad weather. This makes it even more likely that the Fed will decide to taper its monthly asset purchases …
We don’t place much weight on the idea that the Fed would be happy to leave interest rates at near-zero until wage growth returned to 4%. Instead, we believe that a pick-up in wage growth to between 2.5% and 3.0% would be enough to prompt the Fed to pull …
