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The recent upturn in activity and employment growth and the resilience of core inflation suggest that the Fed won't start cutting interest rates until later this year. But although it is taking a little longer than expected, we still believe that core …
18th April 2024
Faltering consumer spending reinforces our view that GDP growth will slow this year, although that slowdown is likely to be modest. After a disappointing couple of months for inflation, easing demand growth should help to drive a more marked decline later …
25th March 2024
The economy continues to appear impervious to higher interest rates and, although we expect growth to slow over the first half of this year, that slowdown is likely to be modest. But we don’t expect continued economic resilience to prevent inflation from …
21st February 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
As core PCE inflation is on track to return to the 2% target by the middle of this year, we expect the Fed to cut interest rates by 25bp at every meeting from March onwards, with rates eventually falling to between 3.00% and 3.25% in early 2025. The …
22nd January 2024
As core PCE inflation is on track to return to the 2% target by the middle of next year, we expect the Fed to cut interest rates by 25bp at every meeting next year from March onwards, with rates eventually falling to between 3.00% and 3.25% in early 2025. …
19th December 2023
The economy’s third-quarter strength was not the start of a renewed acceleration and we continue to expect GDP growth to weaken. Regardless, resilient economic growth has not prevented a continued easing in wage and price inflation, and we still think the …
21st November 2023
The renewed surge in long-term Treasury yields illustrates that the full impact of Fed tightening is still feeding through, and we continue to expect economic growth to slow sharply over the coming quarters. With core inflation still looking on course to …
20th October 2023
Despite the recent rebound in energy prices, the downward trend in core inflation remains firmly intact. And with a growing number of indicators suggesting the labour market is not much tighter than it was in 2019, we expect wage and price inflation to …
20th September 2023
Growth in the real economy appears to be gathering momentum, but with survey-based indicators still weak and credit conditions continuing to tighten, we expect that rebound to be short-lived. In contrast, labour market conditions continue to ease. Nominal …
16th August 2023
We still think the economy is more likely than not to fall into a mild recession later this year, as higher interest rates remain a drag and credit conditions continue to tighten. With the labour market proving resilient and core inflation still much too …
19th July 2023
The investment boom in new hi-tech manufacturing plants is unprecedented, but that boom still hasn’t fed through into higher output or employment in hi-tech manufacturing and investment in IT equipment has been muted in recent quarters. Software …
20th June 2023
The resilience of the April activity data and apparent stabilisation in housing have raised hopes that a recession may yet be avoided this year. That said, forward-looking indicators suggest that the huge rise in interest rates and tightening of bank …
23rd May 2023
We expect rising interest rates and structural headwinds to trigger a deep rout in commercial real estate. The impacts on the real economy will be mostly indirect via the impact on small bank lending, however, rather than the direct impact on …
20th April 2023
Recent data suggest the economy’s strong start to the year was mostly sustained in February, with consumption growth set to accelerate in the first quarter, payroll employment growth robust and, partly reflecting that strength, core inflation still much …
22nd March 2023
The resurgence in activity and employment in January means that there is little chance of the economy falling into recession in the first quarter and we now expect GDP growth of 1.5% annualised. That said, the retail sales data in particular appear to …
21st February 2023
First came the inversion of the yield curve. Next the index of leading indicators began to fall. Then the survey-based activity indicators plunged well below the 50 mark. Finally, this week we learned that the weakness had spread to the hard data on …
19th January 2023
The November CPI report marked the second successive undershoot in inflation and there is mounting evidence that it will continue to fall sharply in 2023. (See Chart 1.) Core goods prices are coming under broad-based downward pressure, as easing supply …
21st December 2022
The resilience of consumer spending is keeping hopes of a soft landing alive. Although GDP growth looks to have slowed in the fourth quarter, and most leading indicators of recession are flashing red, solid retail sales and a jump in vehicle sales …
22nd November 2022
The continued strength of core inflation in September has sealed another 75bp rate hike from the Fed at the November FOMC meeting and raises the chances of that aggressive pace of tightening continuing in December too. Nevertheless, the more hawkish the …
19th October 2022
The Fed looks set to deliver a third consecutive 75bp rate hike tomorrow, but if we’re right that inflation will fall back soon, officials will quickly pivot to much smaller hikes. The continued drop in gasoline prices and easing food inflation will …
20th September 2022
After a year-long contraction in real disposable incomes, the sharp declines in energy prices over recent weeks are finally providing some relief. Alongside continued strong employment growth, we calculate that the drop in retail gasoline prices to …
22nd August 2022
The incoming activity data now show clearer signs of weakness, particularly in the most interest-rate sensitive components of spending. But there are still few signs of that moderation morphing into a recession. The rise in mortgage rates has weighed on …
21st July 2022
The surge in interest rates, plunge in the stock market and weakness of consumer confidence have fuelled fears of an impending recession, but there is still little sign of that in the incoming economic data. The coincident indicators used by the NBER to …
23rd June 2022
The strength of the hard activity data for April refutes the recent message from financial markets that the economy is at risk of imminent recession. The solid gain in control group retail sales, together with upward revisions to past months leaves the …
18th May 2022
While we are confident that inflation will fall back sharply in the second half of this year, that will not stop the Fed delivering a series of 50bp rate hikes at its upcoming meetings. Although gasoline prices have stabilised this month, though the surge …
20th April 2022
While the war in Ukraine and sanctions on Russian oil mean energy prices will remain elevated and push headline inflation above 8% in March, it will still fall sharply later this year. (See Chart 1.) Energy inflation and inflation in categories that saw …
23rd March 2022
The further rise in CPI inflation to 7.5% in January and hawkish comments from Fed officials have seen markets rush to price in a series of aggressive interest rate hikes this year. But recent weeks have also brought tentative signs that better news on …
17th February 2022
The surge in Omicron infections means more people were self-isolating in early-January than at any time since the beginning of the pandemic, although the impact that will have on employment and output remains uncertain. Furthermore, with cases now falling …
24th January 2022
The Omicron variant has supercharged the seasonal wave of virus cases sweeping parts of the US, adding to the existing headwinds to consumption growth over the coming months. (See Chart 1.) In contrast to governments in Europe, however, there are still …
21st December 2021
Whether Jerome Powell or Lael Brainard is given the nod over the coming days, the next 12-18 months are shaping up to be an unusually challenging period for the Fed Chair. The October data showed a renewed jump in CPI inflation to a 30-year high, with …
18th November 2021
We are confident in our new forecasts that GDP growth will be a disappointing 2.7% in 2022 and 2.0% in 2023, while core inflation remains elevated at close to 3%, but we are less confident in our predictions of how the Fed will react to that particular …
21st October 2021
The latest data provide mixed signals on the impact that the Delta variant is having on the economy. The high frequency indicators for high contact services suggest that activity levelled out in August and weakened a little in early September (See Chart …
21st September 2021
The 1.1% m/m fall in retail sales last month illustrates the worsening drag from the sharp slowdown in real income growth, as earlier fiscal support fades and surging prices erode purchasing power. This suggests real consumption growth could be even …
18th August 2021
Although 60% of American adults are now fully vaccinated, the uptick in coronavirus infections linked to the Delta variant has been accompanied by a slight rebound in fears over the spread of the virus. (See Chart 1.) While most states appear unlikely to …
20th July 2021
The further jump in CPI inflation in May was again driven by a handful of categories most affected by the lifting of pandemic restrictions. But there were also clear signs that inflationary pressures are becoming more widespread, with rent of shelter …
16th June 2021
The strength of demand coupled with supply constraints have made shortages of many goods even worse, with the inventory to sales ratio falling to a record low in March. (See Chart 1.) The surge in job openings and share of employers saying they are …
18th May 2021
The latest round of stimulus cheques and the easing of restrictions are driving a renewed resurgence in demand, with retail sales jumping by nearly 10% in March and the regional manufacturing surveys rising to their highest level since the 1970s. (See …
19th April 2021
Base effects will temporarily drive headline and core CPI inflation up sharply over the coming months but, with underlying price pressures also starting to mount, we expect core CPI inflation to remain elevated over the next couple of years. (See Chart …
17th March 2021
The economy has started 2021 on a stronger footing than we anticipated. The 5.3% surge in retail sales last month underlined just how quickly stimulus cheques fed through to stronger spending on big-ticket items, while loosening virus restrictions are …
19th February 2021
Recent data show the current wave of virus infections weighing on the economy, with retail sales falling again in December and the labour market recovery stalling. We think fourth-quarter GDP growth slowed to 4.5% annualised, but the relatively softer end …
21st January 2021
There is now clear evidence that the continued surge in COVID-19 infections and restrictions imposed to control its spread are once again weighing on the economy, with employment growth slowing sharply in November and retail sales dropping back. Moreover, …
16th December 2020
The continued surge in COVID-19 infections across the country is prompting a growing number of states to reimpose restrictions on activity. The softer retail sales data in October indicated that this is already starting to weigh on the economy and, with …
19th November 2020
After rebounding by 30% annualised in the third quarter, we expect a more modest 4.5% gain in GDP in the fourth. But recent data suggest the risks to that forecast could lie to the upside, with investment rebounding rapidly and the September retail sales …
22nd October 2020
The pace of economic recovery has slowed in the last month, but that is arguably still an impressive result given the surge in coronavirus cases over the summer, and the more recent expiry of the enhanced unemployment benefits. The retail sales figures, …
17th September 2020
Although core CPI inflation remains muted at 1.6% in July, the surge in prices last month specifically could be the start of a more significant rebound, as the added costs and ongoing supply constraints stemming from the pandemic and physical distancing …
18th August 2020
The rapid recovery in activity in May and June means that, after contracting by close to 30% annualised in the second quarter, GDP is already on course for a big rebound in the third quarter. But there are signs that the resurgence in coronavirus …
23rd July 2020
The 17.7% m/m jump in retail sales in May showed that consumer spending is recovering far quicker than most had expected as lockdowns have eased, with headline retail sales reversing their April drop and underlying control group sales back at pre-pandemic …
18th June 2020
The latest hard data suggest economic activity was running 20% below February levels in April, a far sharper downturn than the 2008/09 financial crisis and one compressed into just two months. (See Chart 1.) With lockdowns easing the economy is now …
19th May 2020
The early hard data for March confirmed an unprecedented hit to economic activity from the coronavirus pandemic, with retail sales seeing the sharpest monthly fall in the survey’s 30-year history and manufacturing output experiencing its biggest decline …
16th April 2020
