US Economics Update Biden plan points to limited further fiscal expansion The $1.8trn in spending and tax credits in the American Families Plan would provide a relatively small boost to GDP growth as, like the earlier infrastructure proposals, it would be mostly paid for... 28th April 2021 · 4 mins read
US Economics Update American Jobs Plan not a return to big government We suspect that President Joe Biden will struggle to garner bipartisan support for his $2trn in infrastructure spending, even if he was willing to placate centrist Senate Republicans by dropping his... 31st March 2021 · 7 mins read
US Economics Update Monetary Indicators Monitor (Feb.) The Fed’s asset purchases are fuelling a continued surge in the narrow money aggregates, but growth in both our M3 measure of broad money and bank lending remain on a downward trend. 30th March 2021 · 3 mins read
US Economics Update CPI inflation will rise back above PCE inflation The unusual rise in the Fed’s preferred PCE measure of inflation above CPI inflation in January partly reflects the impact of the differing methodology which, as spending patterns return to pre... 24th March 2021 · 4 mins read
US Economics Update Fed plays down prospect of rate hikes The updated economic projections released after the Fed’s mid-March meeting show that officials expect strong economic growth this year to have only a transitory impact on inflation, which explains... 17th March 2021 · 3 mins read
US Economics Update Stimulus is big, but we won’t be revising our forecasts Although Democrats are close to securing passage of nearly all the $1.9trn originally requested by President Joe Biden in his American Rescue Plan, which is significantly more than the $1trn in... 6th March 2021 · 4 mins read
US Economics Update What explains the huge drop in the labour force? Around half of the four million decline in the labour force over the past year reflects a wave of early retirements which is likely to be irreversible. The smaller 2.3 million drop in prime-age... 3rd March 2021 · 3 mins read
US Economics Update Fed won’t over-react to rising real yields If real yields continue to rise we could see the Fed shifting the composition of its monthly asset purchases to focus more on the long end of the curve, but we doubt that it would be willing to adopt... 2nd March 2021 · 5 mins read
US Economics Update Student debt forgiveness would do little for economy Even if a significant share of the $1.6trn of student loan debt owed to the Federal government was forgiven, it would provide only a limited boost to activity while driving a potentially sizable... 18th February 2021 · 3 mins read
US Economics Update Monetary Indicators Monitor (Jan.) The continued surge in growth of narrow measures of the money supply underline that the economy is awash with liquidity, but that will not trigger a surge in price inflation when growth in the broader... 16th February 2021 · 3 mins read
US Economics Update Surveys paint more optimistic picture of labour market The latest NFIB and JOLT surveys suggest that labour market conditions remain stronger than the headline data imply and add to the evidence that inflation will rebound this year. 9th February 2021 · 2 mins read
US Economics Update Is unemployment higher than the headline data imply? Fed Chair Jerome Powell’s claim that the ‘true’ unemployment rate is still close to 10% only makes sense if the four million workers who left the labour force last year will return. It’s still too... 4th February 2021 · 3 mins read
US Economics Update Easing credit standards to support consumer recovery The Fed’s Senior Loan Officer Survey reveals that access to credit is improving for consumers, which will support an acceleration in consumption growth this year. 2nd February 2021 · 2 mins read
US Economics Update Fed’s Powell strikes dovish tone despite vaccines The Fed acknowledged in its post-FOMC meeting statement today that the economic recovery weakened in the final couple of months of last year, but balanced that near-term pessimism with greater... 27th January 2021 · 3 mins read
US Economics Update Fed will be reassured by rising inflation expectations The rebound in market-based inflation compensation measures will not alarm the Fed since expectations are still relatively muted. Instead, Fed officials are more likely to view the rise as a welcome... 26th January 2021 · 2 mins read
US Economics Update Monetary Indicators Monitor (Dec.) The surge in narrow money growth is entirely due to regulatory changes and a substitution out of savings accounts due to low interest rates. Our measure of M3 shows broad money growth has slowed... 20th January 2021 · 3 mins read
