Filtered by Subscriptions: US Economics Use setting US Economics
Trump tariff push descends into farce Tariff flip-flop amplifies confusion Markets reacted badly this week when President Donald Trump first imposed 25% tariffs on all imports from Canada and Mexico, with the only partial exemption for Canadian energy. …
7th March 2025
Following the 0.5% m/m slump in real consumption in January and the massive 10% m/m surge in real goods imports, we now expect first-quarter GDP to contract by 1.0% annualised. Assuming that surge in imports reflects the front-running of tariffs, however, …
28th February 2025
Pills, chips and automobiles After last week’s focus on reciprocal tariffs, President Trump shifted his attention this week to product-specific tariffs targeting motor vehicles, semiconductors, and pharmaceuticals. Speaking to reporters on Tuesday, he …
21st February 2025
Reciprocal tariffs will be a big deal January inflation bad, but could have been worse After a hot CPI report this week and a not-so-hot PPI report (at least not in the components that count) we estimate that the Fed’s preferred core PCE price measure …
14th February 2025
Do not write off tariffs President Donald Trump’s U-turn on 25% tariffs for Canada and Mexico this week, seemingly in exchange for a few trivial concessions from both countries, has reignited speculation he is using the threat of trade barriers as a bluff …
7th February 2025
Fed in no hurry with tariffs coming soon Underlying economic growth remains solid The 2.3% annualised gain in fourth-quarter GDP came broadly in line with the updated nowcast estimate maintained by our data team. (See here .) Although GDP growth slowed …
31st January 2025
President Donald Trump’s first week back in office kicked off with a bang. He signed around 100 executive orders and strongly signalled that there were more policy changes to come. The week’s developments give us more confidence in our earlier assumptions …
24th January 2025
Real economy still firing on all cylinders The strong December employment figures were followed by news this week of solid gains in control group retail sales, industrial production and housing starts. As a result, we now estimate that fourth-quarter GDP …
17th January 2025
Still waiting for clarity on the Trump agenda More than two months after Donald Trump and the Republicans completed a narrow clean sweep in last November’s election, and with only 10 days until the inauguration, there is still massive uncertainty about …
10th January 2025
Earlier this week we published our US Outlook . We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle …
20th December 2024
Fed presented with early Christmas gift Going into this week, it already looked likely that the Fed would cut its policy rate by 25bp at its December meeting (as opposed to leaving it unchanged), and the muted November price data cemented it. Based on the …
13th December 2024
Cut or skip? This week, Governor Christopher Waller signaled support for continuing the loosening cycle, but noted he could favour a pause this month if “our forecasts of slowing inflation and a moderating but still-solid economy are wrong”. While that …
6th December 2024
Trump tosses first social media hand grenade Here we go again. This week President-elect Donald Trump lobbed his first social media hand grenade since the election – threatening to impose a 25% tariff on Canada and Mexico if both countries didn’t do more …
27th November 2024
We remain sceptical that deregulation will provide a disinflationary boost to the economy’s supply side and we suspect that any reduction in government spending or headcount would turn out to be modest. Libertarian-minded Republicans have long-believed …
22nd November 2024
Road to 2% inflation a bumpy one The hotter-than-expected October price data serve as a reminder that the Fed’s fight against inflation is not over. Based on the CPI, PPI and import price data, we estimate that the Fed’s preferred core PCE deflator price …
15th November 2024
The market reaction to Donald Trump’s election victory suggests that, with the Republicans closing in on a clean sweep of Congress too, his return to the White House will be a net positive for the economy. We remain highly sceptical that the Republicans …
8th November 2024
Race going down to the wire Although the betting markets are still convinced that Donald Trump will win next week’s presidential election, the polls remain much closer – and within the margin of error. Many of those polls have tweaked their methodologies …
1st November 2024
Trump-Musk Bromance: Economic implications Elon Musk has become one of Donald Trump’s biggest campaign supporters and donors in recent months, contributing $75 million to his America PAC and sharing the stage at events with the former President. Musk and …
25th October 2024
The data this week confirmed that retail sales rose strongly in September and industrial production suffered only modestly from hurricane and strike disruption, with our third-quarter GDP growth estimate still at 3.5% annualised. That said, with the full …
18th October 2024
Hurricanes add to upside inflation risks Inflation risks more balanced Based on the combined CPI and PPI data, we calculate that the Fed’s preferred core PCE deflator price measure increased by 0.24% m/m in September which, at 2.9% annualised, is a little …
11th October 2024
September’s blockbuster employment report and the rebound in the October ISM services index mean that any hopes of another 50bp rate cut are long gone. We continue to expect the Fed to take a more measured approach from next month’s FOMC meeting onwards – …
4th October 2024
GDP-GDI gap resolved Leading up to this week’s annual revisions to the national accounts, we were attuned of the risk that the expenditure-based real GDP measure might be revised lower to match up with the income-based real GDI, given the wide gap that …
27th September 2024
Fed opts for a 50 despite strong GDP growth Fed goes big The Fed’s decision to start its rate cutting cycle with a bang was not a big surprise after the seemingly coordinated media articles late last week warning that the 25bp vs 50bp debate was closer …
20th September 2024
25bp vs 50bp debate finely poised The 25bp vs 50bp debate seemed settled following Governor Christopher Waller’s speech shortly after the August Employment Report, in which he suggested that he was leaning toward the smaller move. The cautious tone of …
13th September 2024
Unemployment rate drops back The 142,000 rise in non-farm payrolls and fall in the unemployment rate to 4.2% confirmed that some of the weakness in July was due to temporary factors, with the number of people on temporary layoff falling by 190,000. That …
6th September 2024
Harris supports dramatic increase in taxes After unveiling plans to boost spending and cut taxes for the middle-class in a big speech a couple of weeks ago, Vice President Kamala Harris has quietly acknowledged since then that she intends to pay for those …
30th August 2024
The dovish speech from Chair Jerome Powell at the Jackson Hole Symposium suggests that the Fed will be choosing between a 25bp and a 50bp cut at its meeting in September. A 50bp cut would look less likely if the unemployment rate drops back this month, …
23rd August 2024
More good data all round More good price data The July price data should have provided more relief for any Fed officials still worried about inflation. The PPI, CPI and import price data imply that the Fed’s preferred core PCE measure increased by 0.16% …
16th August 2024
Economy still nowhere near recession In purely mechanical terms, the limited data released this week did trigger a downward revision to our third-quarter GDP growth forecast to 1.7%, from 2.0%. But only because the June trade data sets up for a slightly …
9th August 2024
Labour market cracks raise risk of hard landing Things went from bad to worse after the Fed’s policy announcement mid-week, with the data on Thursday revealing a further fall in the ISM manufacturing index and a rise in initial jobless claims to a near …
2nd August 2024
GDP growth not quite as rosy as it seemed The acceleration in GDP growth to 2.8% annualised in the second quarter, from 1.4%, was stronger than the consensus estimate of 2.0% but not a big surprise given the Atlanta Fed GDPNow was pointing to a 2.6% gain …
26th July 2024
Shelter disinflation adds to case for September rate cut Fed officials back September rate cut In comments ahead of the pre-July FOMC blackout that begins this weekend, Fed officials appeared open to a September rate cut. On Monday, Chair Jerome Powell …
19th July 2024
"More good data" needed There were mixed messages from Fed Chair Jerome Powell this week in his semi-annual testimony to Congress. Powell said in his opening remarks that the “economy continues to expand at a solid pace” and the unemployment rate is …
12th July 2024
Trump now has clear lead Trump favourite to beat whomever Democrats pick Following Joe Biden’s disastrous debate performance, which appears to have hit his polling numbers and gone down badly with big donors, there is clearly now a good chance that he …
5th July 2024
Biden debate woes leave Trump ahead Trump’s conviction vs Biden’s lack of conviction Joe Biden’s faltering debate performance leaves Donald Trump as the narrow favourite to win this November’s presidential election. There isn’t an alternative Democratic …
28th June 2024
Fiscal outlook deteriorates further Deficit going from bad to worse This week the CBO released new projections showing that the Federal deficit is expected to be $1.9trn, or 6.7% of GDP, in the current 2024 fiscal year that ends this September. (See Chart …
21st June 2024
Fed split, but better data point to two rate cuts The Fed’s updated projections indicated that a slim majority of officials favour fewer than two interest rate cut this year but, in response to the soft May CPI, PPI and import price data, the markets …
14th June 2024
We don’t think that the below-potential GDP growth implied by the recent activity data is a cause for concern yet, particularly while the labour market appears healthy. That will keep the Fed squarely focused on the inflation side of its mandate at its …
7th June 2024
Trump conviction won’t sway the election Trump campaign won’t be decided by courts We doubt that Donald Trump’s New York felony conviction on charges of falsifying business documents will have any significant impact on the presidential election …
31st May 2024
Fed in wait-and-see mode Fed to proceed with caution The minutes of the Fed’s early May policy meeting were, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, …
24th May 2024
New tariffs much ado about nothing The Biden administration’s announcement this week of an increase in tariffs on hi-tech & green-related goods imports from China will have little impact. The biggest change ostensibly was the announcement that the tariff …
17th May 2024
Markets brace for April data dump After a quiet week for data this week, following April’s softer Employment Report, things will heat up again next week with April’s CPI report. CPI the new king of data releases CPI is now undoubtedly the most …
10th May 2024
Have soft landing hopes been dashed? GDP growth slows, but stronger under the hood The slowdown in first-quarter GDP growth to 1.6% annualised, from 3.4%, was more marked than expected, but it was principally due to a bigger drag from the net exports …
26th April 2024
Protectionism seen as a vote winner by both parties After Fed Chair Jerome Powell acknowledged this week that there has been a “lack of further progress” on lowering inflation this year, markets dialled back rate cut expectations, with the first 25bp …
19th April 2024
The third consecutive 0.4% m/m increase in core CPI in March, coming on the heels of the 303,000 surge in non-farm payrolls, fuelled fears that a pick-up in the real economy is now translating into a resurgence in inflation too. We are not convinced. …
12th April 2024
Supercore inflation fundamentals still improving Inflation fundamentals improving This week brought more good news on the outlook for so-called supercore inflation. Core services (ex-housing) prices, aka supercore, are the most labour-sensitive component …
5th April 2024
Streets of Baltimore The collapse of the Francis Scott Key bridge, which was hit by an out-of-control container ship this week, could result in a lengthy disruption to the Baltimore port. Nevertheless, since that port is the 15 th largest in the country, …
28th March 2024
The Fed wasn’t as hawkish as we had expected this week and, assuming the recent upturn in core inflation proves temporary, there is still a good chance that interest rate cuts will begin in June. Fed content with more gradual inflation fall Despite recent …
22nd March 2024
Fed to stress caution amid inflation uncertainty We still expect the Fed to cut interest rates in June, although we don’t expect officials to provide a strong steer either for or against at next week’s FOMC meeting. The updated Summary of Economic …
15th March 2024
Fed Chair Jerome Powell’s congressional testimony struck a notably less hawkish tone than we have heard recently from some of his colleagues. And with the economic data this week providing little support for the idea of a renewed upturn in inflation, we …
8th March 2024
