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Consumer prices increased by 0.4% m/m in January, as the surge in commodity prices continued to feed through. … Consumer Prices (Jan.) …
17th February 2011
The recovery regained momentum over the final few months of last year and, helped by the boost from the latest fiscal stimulus, we expect GDP growth of 3% this year. … Recovery still dependent on policy …
16th February 2011
The 0.3% m/m increase in manufacturing output in January is actually quite encouraging, given that the already reported drop in average hours worked by manufacturing employees last month suggests the wave of unseasonably severe winter storms held …
Despite the rebound in January, housing starts remain at an unusually low level. This is unlikely to change when there is little need for new homes or when falling prices and rising costs are denting the desire of homebuilders to boost construction. … …
Despite the acceleration in the growth rate of the narrow M1 monetary aggregate, the growth of the broader M2 aggregate remains muted and our M3 measure is still shrinking. … Monetary Indicators Monitor …
15th February 2011
The retail sector started the year on a soft note, suggesting that consumption growth is losing momentum. This is perhaps even more worrying at a time when spending should be receiving a boost from the payroll tax cut and rising equity prices. In …
The decline in the unemployment rate doesn't just reflect an improving job market, it is also equally due to a decline in the labour force participation rate. There are roughly one million people who are no longer in the labour force but would take a job …
14th February 2011
The prospect of a rebound in imports at the start of this year, most probably linked to the recent strength of consumption, suggests that the external sector is unlikely to provide as large a boost to overall economic growth in the first quarter of this …
11th February 2011
In light of recent increases in oil and agricultural commodity prices, we now expect CPI inflation to peak at 2.5% this summer, up from our previous forecast of 2.0%. But this is unlikely to sway the Federal Reserve, not least because higher gasoline and …
7th February 2011
The severe winter weather that occurred during the sample week appears to explain most of the weakness in January's non-farm payrolls, which increased by only 36,000, compared with a 121,000 gain the month before. … Employment Report …
4th February 2011
Today's data releases illustrate the two-speed nature of this recovery, with the manufacturing sector leading the way and the construction sector lagging far behind. … ISM Manufacturing Index …
1st February 2011
The Fed's latest survey of Senior Loan Officers suggests that we could see a marked turnaround in business lending this year, which would presumably boost investment and possibly even employment too. In contrast, demand for residential mortgages has only …
31st January 2011
The latest Federal budget projections from the non-partisan Congressional Budget Office underline the terrible state of the public finances. This year's deficit is now expected to reach $1,480bn, or 9.8% of GDP. Although the deficit should narrow …
The acceleration in GDP growth to 3.2% annualised in the fourth quarter, from 2.6% in the third, confirms that the economic recovery regained some lost momentum over the closing stages of last year. … GDP (Q4 1st …
28th January 2011
Over the past year, payroll employment has increased by just 1.1 million, reversing only a small number of the 8.3 million jobs lost during the recession. What makes the labour market recovery even more disappointing, however, is that those limited job …
27th January 2011
Our econometric model suggests that payroll employment increased by around 125,000 in January. That would be in line with the average gain in the previous three months and suggest that the recent rebound in economic growth has yet to translate into much …
December's durable goods figures are frankly very suspicious looking. According to the report, new orders for non-defence aircraft dropped from $5,019 million in November to an impossibly low $24 million in December. Nonsense. … Durable Goods Orders …
The tone of the Fed's latest policy statement suggests that neither the most recent pick up in economic growth nor the continued surge in commodity prices have had much of an impact on officials. Worried by the still elevated unemployment rate and low …
26th January 2011
This week's release of GDP for the fourth quarter will confirm that the real economy has finally returned to the size it was before the recession struck. But it will be some years yet before the US recovers all of the output and jobs "lost" as a result of …
24th January 2011
Rapidly rising commodity prices are beginning to have a marked impact on inflation, real spending and the external trade balance. Over the past six months, agricultural commodity prices have increased by more than 60%. The rise in energy prices has been …
20th January 2011
We don't anticipate that the stronger tone of the incoming economic data will prompt the Fed to curtail its plan to buy $600bn of Treasury securities by June at the next FOMC meeting, which concludes next Wednesday (26th January). Indeed, even with the …
19th January 2011
The continued weakness of US jobs growth can partly be explained by offshoring. Tempted by lower labour costs and lower corporate taxes overseas, multinational firms are expanding employment abroad rather than in America. Employment by US multinational …
18th January 2011
The Fed's QE2 programme of Treasury purchases is yet to have any impact on the broader monetary aggregates, let alone price inflation. The annual growth rate of our Capital Economics' measure of M3 remains in negative territory, while the growth rate of …
17th January 2011
The unexpected dip in the NFIB gauge of small business optimism in December has reignited fears that smaller firms are missing out on the recovery. As we have pointed out before, however, the NFIB survey puts far too much weight on the construction and …
December's retail sales and consumer price reports together suggest that real consumption growth accelerated to 3.8% annualised in the fourth quarter, from 2.4% in the third. If our calculations are correct, that would be the strongest quarterly growth in …
14th January 2011
November's trade figures support our view that annualised GDP growth in the fourth quarter of last year was at least 4%, better than the consensus forecast of just over 3%. Meanwhile, December's producer prices data provide little evidence that price …
13th January 2011
The second downward leg in house prices, which began last year, is likely to have a smaller impact on consumer spending than the initial plunge both in proportionate and absolute terms. Nonetheless, we suspect that falling house prices are one of a few …
10th January 2011
The 103,000 gain in payroll employment in December was very disappointing after the spectacular 297,000 gain touted by the ADP survey. Admittedly, the drop in the unemployment rate, from 9.8% in November to a 19-month low of 9.4%, is more encouraging. But …
7th January 2011
The latest ISM non-manufacturing and ADP private payroll surveys both suggest that the economic recovery picked up some significant momentum towards the end of last year. Growth should remain fairly robust in the first half of this year, boosted by the …
5th January 2011
The sharp decline in the number of initial jobless claims towards the end of last year should not be interpreted as a sign that the labour market recovery is gaining momentum. Nonetheless, the 39,000 increase in non-farm payroll employment in November …
4th January 2011
The improvement in December's ISM manufacturing index, along with the rebound in construction spending in November, suggests that the recovery is regaining some of the momentum lost during the Summer. … ISM Manufacturing Index …
3rd January 2011
In the last US Weekly of the year we want to flag up the main risks surrounding our new forecast that GDP will grow by 3.0% in 2011, before slowing to 2.0% in 2012. The main upside risk is that we are overstating the restraining impact that the balance …
27th December 2010
The data releases today support our estimate that GDP growth probably accelerated to 4.0% annualised in the fourth quarter, from 2.6% in the third. The main difference is the pick up in consumption growth, which is more than offsetting a slowdown in the …
23rd December 2010
The conventional wisdom is that America has avoided a repeat of the recent Japanese experience because its policymakers acted much more quickly and aggressively to prevent the economy slipping into a deflationary spiral. We're not quite so convinced. … …
21st December 2010
Annualised GDP growth is on course to accelerate to around 4% in the fourth quarter, from 2.5% in the third. Moreover, the new fiscal stimulus means that we now expect growth to average 3% in 2011. Nevertheless, while the stimulus will provide a temporary …
20th December 2010
The recent run of stronger economic data has prompted us to raise our fourth-quarter GDP growth forecast to 4% annualised, from 2.5%. Based on the higher starting point for GDP going into next year and the new fiscal stimulus, which is worth an additional …
The Fed was always going to leave the size of the second round of quantitative easing (QE2) unchanged today as it is too soon to judge whether it has been a success or a failure. If we are right in expecting the unemployment rate to remain very high and …
15th December 2010
Consumer price inflation remained unusually weak in November and, given the large amount of excess capacity in America's economy, we expect it to continue trending gradually lower over the next couple of years. … Consumer Prices & Industrial Production …
The rate of decline in our Capital Economics' measure of M3 has eased, while the growth rates of M1 and M2 have picked up again slightly. However, there is nothing here to suggest that inflation is about to accelerate. … Monetary Indicators Monitor …
14th December 2010
The Holiday shopping season appears to have got off to a very good start, suggesting that fourth-quarter consumption growth will be strong. But without a meaningful acceleration in real income growth, this tentative consumer revival cannot last. … Retail …
The fall in the proportion of homeowners in negative equity in the third quarter offers little comfort since it was driven by foreclosures rather than a rise in prices. The second downward leg in prices that is now well underway may mean that more …
13th December 2010
The proposed favourable change to the tax treatment of capital expenditure raises the question of whether it will actually be businesses, rather than consumers, that rescue the economy from a number of years of subdued growth. However, while some further …
The sharp decline in the international trade deficit to a nine-month low of $38.7bn in October, from $44.6bn, suggests that our 2.5% forecast for annualised fourth-quarter GDP growth will need to be revised higher. (We'll wait for next week's data deluge …
10th December 2010
The latest Flow of Funds accounts from the Fed show that the public sector is now accumulating debt at a faster pace than the private sector is paying it down. … Flow of Funds …
The package of tax proposals agreed by the Obama administration and Republican leaders constitutes an additional fiscal stimulus worth slightly less than $300bn, or 2% of GDP, above and beyond what we had previously allowed for in 2011. This additional …
8th December 2010
After announcing it would purchase an additional $600bn of Treasury securities at the last FOMC meeting in early November, it is very unlikely that the Fed will change course at next Tuesday's meeting. We suspect that officials will have been disappointed …
7th December 2010
"Never bet against the US consumer" proved to be a valuable maxim during the last decade. The latest data suggest that the US consumer might be slipping the superhero cape back on, ready to save the world again from the perils of deficient demand. Real …
6th December 2010
November's Employment Report was a painful reality check for those hoping that a meaningful acceleration in economic activity was underway. The truth is that the economic recovery is going nowhere at a time when companies are unwilling to boost hiring …
3rd December 2010
The housing market recovery appears to have stalled before it even really began. Home sales fell back in October and the renewed downward trend in prices appears to have gathered pace. This is all happening at a time when mortgage rates have remained …
2nd December 2010
The resilience of the ISM manufacturing index and the improvement in the ADP employment survey together suggest that the economy is starting to emerge from its summer soft patch. Unfortunately, there is also nothing in the data to suggest that the …
