US Economics Update Could the Fed’s interest rate projections be a mistake? The Fed began publishing interest rate projections submitted by FOMC participants as far back as 2012, but in the past seven years only one maverick official has ever forecast a cut in interest rates... 8th April 2019 · 1 min read
US Economics Update Yield curve not the only recession indicator For all the focus on the Treasury yield curve, other leading indicators of activity are not yet signalling that a recession is imminent. But their recent deterioration does suggest that the risks are... 28th March 2019 · 1 min read
US Economics Update Monetary Indicators Monitor (Feb.) The pick-up in broad money growth to a six-year high in February is not necessarily a positive for the economy because it is a lagging indicator. But it does at least suggest the Fed’s balance sheet... 27th March 2019 · 1 min read
US Economics Update Fed signals extended patience & announces end of QT The Fed’s revised economic projections, which now imply no rate hikes this year, together with the announcement that it will halt its balance sheet run-down in September, came as a positive surprise... 20th March 2019 · 1 min read
US Economics Update China trade deal won't prevent economic slowdown The rumoured trade deal with China won’t in itself provide much boost to the economy even if it includes the removal of the punitive tariffs levied by both sides in the past year. We continue to... 4th March 2019 · 1 min read
US Economics Update Fed unlikely to hike rates again this cycle Fed Chair Jerome Powell reiterated the FOMC’s “patient” mantra in his testimony to Congress today, but we think the Fed is already done hiking interest rates. With GDP growth slowing below potential... 26th February 2019 · 1 min read
US Economics Update Economic growth slowing below trend The weak incoming data mean that economic growth is on track to slow below its 2% potential pace this quarter. That kills off any remaining prospect of further Fed rate hikes and, with economic growth... 26th February 2019 · 1 min read
US Economics Update Smaller tax refunds a risk to first-quarter GDP Even if there are no further delays to the IRS processing tax refunds, we think households are on track to receive perhaps $30bn less in the first quarter than last year, equivalent to 0.7% of... 12th February 2019 · 1 min read
US Economics Update Fading optimism dragging investment growth lower The latest NFIB survey suggests that a combination of rising interest rates and weaker business optimism is beginning to weigh more heavily on investment growth. 12th February 2019 · 1 min read
US Economics Update US government debt unlikely to lose its appeal The news that China’s share of US Treasury holdings has fallen to a 12-year low, alongside the surging Federal budget deficit, has prompted the usual warnings that the US will struggle to find buyers... 11th February 2019 · 1 min read
US Economics Update Monetary Indicators Monitor (Dec.) The acceleration in broad money growth to a six-year high in December should put to rest any lingering concerns about the impact of the Fed’s balance sheet run-down on the economy. 5th February 2019 · 1 min read
US Economics Update Fed’s new-found dovishness won’t prevent slowdown Even if the Fed has stopped hiking interest rates sooner than we originally envisaged, we doubt that will prevent a marked economic slowdown this year. After all, that dovishness was partly prompted... 5th February 2019 · 1 min read
US Economics Update Tighter lending standards point to further slowdown The Fed’s latest Senior Loan Officer Survey suggests the slowdown in business equipment investment and rate-sensitive consumer spending growth will worsen in the coming months. Loan demand has... 4th February 2019 · 1 min read
US Economics Update "Patient" Fed will be cutting rates next year The dovish tone of the policy statement and press conference following today’s FOMC decision will reinforce expectations that the Fed is almost done raising interest rates. We think a sharp economic... 30th January 2019 · 1 min read
US Economics Update Composition of the Fed’s balance sheet matters too With the “patient” Fed set to leave interest rates unchanged, attention has shifted to its plans for balance sheet normalisation. But focusing on the terminal size of the balance sheet misses an... 29th January 2019 · 1 min read
US Economics Update Rising prime-age participation not all good news The increase in participation of those aged 25-54 is partly due to a structural decline in disability rates, but the more recent drop in fertility rates also appears to be playing a key role. That... 28th January 2019 · 1 min read
