Filtered by Subscriptions: US Economics Use setting US Economics
The inflationary impact of tariffs for all President Trump’s various tariff threats would, if implemented in full, trigger a rebound in consumer price inflation later this year to between 3% and 4%, which would make it much harder for the Fed to resume …
28th January 2025
The declaration of a National Energy Emergency underlines President Trump’s aspiration to extend the US’s dominance in global energy markets, and his willingness to use the US’s clout as leverage will reshape global energy flows during his term. That …
23rd January 2025
The Shape of the Fractured World in 2025 The share of the fracturing global economy that is accounted for by China and its geopolitical allies contracted in 2024, leaving it under a third the size of the US bloc at the start of 2025. This fall was in part …
17th January 2025
Donald Trump’s second term could redraw the global geopolitical map. A sustainable “Grand Bargain” with China, warmer relations with Russia, or a breakdown in the relationship between the US and its traditional allies could each reshape supply chains and …
7th January 2025
The incoming Trump administration’s proposed crackdown on immigration means labour force growth is likely to slow toward zero. That would pull down potential GDP growth to less than 2% and labour shortages would contribute to increased inflationary …
4th December 2024
Although the Republicans completed a clean sweep in the recent election, we are sceptical that this opens the door to additional fiscal stimulus. We do expect the original Trump tax cuts, which are due to expire at the end of next year, to be extended. …
3rd December 2024
We discussed the global impact of higher tariffs in a Drop-In on Tuesday, 26th November. Click here to watch the 20-minute online briefing. In this Focus, we construct a framework to explore the channels through which an import tariff works, which we use …
25th November 2024
If implemented in full on day one, Donald Trump’s trade, immigration and fiscal policies would together be stagflationary. We suspect that he will be forced to water down his plans, however, and it could take some time to implement them. The upshot is …
31st July 2024
A return of President Trump to the White House would be a shot across the bows for global efforts to reduce emissions – particularly as he would almost certainly withdraw the US from the Paris Agreement again . But while he could deal another blow to the …
25th June 2024
Reshoring still more myth than reality Although it has been a priority for the last three administrations, the reshoring of lost manufacturing jobs remains more myth than reality. There has been a significant boom in the construction of hi-tech …
12th March 2024
The resurgence in productivity growth is mainly a cyclical response to the tightness of the labour market rather than a sign that the AI revolution is already bearing fruit. Nevertheless, that still implies scope for productivity growth to remain …
7th February 2024
If he wins this year’s presidential election, Donald Trump’s plans for a universal 10% tariff on all imports and tariffs of up to 60% on imports from China specifically would subtract up to 1.5% from US GDP and trigger a rebound in inflation that could …
31st January 2024
Inflation: Mission accomplished? We maintain a high conviction that core PCE inflation will be back to the 2% target by mid-2024. Despite claims that “the last mile will be the hardest”, core PCE prices have already been running at a 2% annualised pace or …
29th January 2024
The resurgence in the labour force over the past year mainly reflects the ongoing boost to participation from increasing opportunities for women to combine parenthood with work, more young people choosing jobs over college, and a continued decline in …
11th December 2023
With the budget deficit rebounding over the last year and Congress characterised by partisan dysfunction, the odds of a full-blown fiscal crisis developing over the next decade are rising. The US faced a similarly bleak fiscal outlook in the early 1990s …
4th December 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
The resilience of PCE core services ex-housing inflation is only partly due to the strength of labour market conditions, and other factors are likely to play an important role in driving it lower over the rest of this year. That should reinforce the …
15th May 2023
Note: We discussed our revamped FCIs and took your questions on global financial conditions in a 20-minute online briefing on Thursday, 20 th April . Watch the recording here . We have revamped our financial conditions indices (FCIs) for advanced …
18th April 2023
As the economy slides into a mild recession in the first half of next year, triggering a rebound in the unemployment rate to almost 5% by end-2023, the resulting slowdown in the growth rates of wages and unit labour costs will play a supporting role in …
30th November 2022
Despite the unanticipated strength in recent months, there are still good reasons to expect core inflation to fall markedly next year. That moderation will not require a deep recession and/or significant rise in the unemployment rate, although we do …
2nd November 2022
We think that the economy is well-placed to handle higher interest rates and anticipate a period of weak economic growth rather than an outright recession: Rate-sensitive spending is a relatively small share of the economy right now, there are no …
11th July 2022
We expect the Fed to reduce its asset holdings by more than $3trn over the next couple of years, enough to bring the balance sheet back in line with its pre-pandemic level as a share of GDP. That shouldn’t have a major impact on the economy but, with …
10th May 2022
Productivity growth surged during the pandemic last year, but that was principally due to the disproportionate job losses in low-productivity sectors like leisure & hospitality, which raised the economy-wide average level. The pandemic also accelerated …
27th July 2021
The widespread labour shortages evident in the survey data and job opening & quit rates are only partly due to transitory factors, including enhanced unemployment benefits, childcare constraints, and virus fears. Limited international migration, the wave …
29th June 2021
Fed Chair Jerome Powell is resolute in his belief that the burst of stronger inflation we are about to see will prove temporary, with underlying inflation dropping back to the 2% target next year. We are not convinced. Given the breadth of the upward …
6th May 2021
In a world where the Phillips curve is flat, inflation expectations become the key driver of actual inflation over the medium term. But getting a true handle on inflation expectations is difficult because of the large number of diverse measures that are …
31st March 2021
Much of the recent discussion on whether the proposed $1.9trn fiscal stimulus, equivalent to nearly 9% of GDP, could be too big when the output gap is closer to 3%, has glossed over the fact that the remaining shortfall in output is concentrated in the …
23rd February 2021
We suspect that President Joe Biden’s plan to more than double the minimum wage within four years would have only a minimal impact on GDP. While there would almost certainly be some job losses as a result, we expect most of the adjustment would come via …
10th February 2021
President-elect Joe Biden stood for election on a far-reaching environmental plan which, although it will be harder to implement with the Republicans likely to control the Senate, still represents a dramatic U-turn from President Donald Trump’s term in …
9th December 2020
The pandemic has increased the odds that the US will eventually experience a period of high inflation, principally because we expect the Fed to be less committed to ensuring price stability in the future. The higher public debt burden, slower global …
16th November 2020
A Joe Biden victory in November together with Democrats winning back control of the Senate could see a big increase in taxation and federal spending, together with a shakeup of healthcare, regulatory and trade policy. All of that could have a bearing on …
13th August 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
If President Donald Trump were to win a second term, we’d expect both fiscal and monetary policy to remain loose, amid a push to install a more dovish Fed Chair in 2022. There would also be an upside risk of a second, smaller round of deficit-financed tax …
23rd January 2020
There is little to suggest that President Donald Trump’s deregulatory agenda has provided a significant boost to economic growth. While it may still be too soon to fully judge the impact, the historical evidence suggests that hopes of a more significant …
9th January 2020
The inversion of the yield curve and the deterioration in survey-based indicators have raised fears that the US is headed for a recession, but the hard economic data and other financial indicators suggest the risks remain low. To cut through the …
5th September 2019
