Filtered by Subscriptions: US Economics Use setting US Economics
2023 recession increasingly likely Our composite tracking models suggest that the economy is increasingly likely to fall into recession in 2023, although the risks of a downturn beginning before the end of this year still appear relatively low. Our …
2nd 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 …
The job openings and quit rates were little changed in September (see Chart 1), but the downward trends over the past six months point to an easing of labour market conditions which will weigh more heavily on wage growth next year. While the initial turn …
1st November 2022
Goods price pressures evaporating as demand weakens The further fall in the ISM manufacturing index to 50.2 in October, from 50.9, illustrates that global economic weakness and the earlier surge in the dollar are catching up with the factory sector. But …
The 2.6% annualised rise in third quarter GDP was a lot worse than it looked, with growth in underlying demand grinding to a near-halt. At the same time, there are mounting signs that economic weakness will soon feed through to disinflation in core …
28th October 2022
Wage growth gradually slowing, even as economy holds up Although core PCE inflation rebounded to 5.1% in September and real consumption looks to have more momentum than previously thought, the Fed may still draw some encouragement from the more modest …
We are pencilling in a further step down in non-farm payroll growth to 225,000 in October and we expect that payrolls will be falling outright by early 2023. Payroll gains have been slowing from their unusually rapid clip earlier in the year, with the …
27th October 2022
GDP rebounds, but underlying demand stagnates The 2.6% annualised rebound in third-quarter GDP looks impressive, but it was entirely due to a 2.8%-point boost from net external trade. Final sales to private domestic purchasers, a better measure of …
GDP rebounds, but underlying demand stagnating The 2.6% annualised rebound in third-quarter GDP looks impressive, but it was entirely due to a 2.7% boost from net external trade. Final sales to domestic purchasers, a better measure of underlying economic …
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
26th October 2022
PMIs point to rapid slowdown The drop back in the S&P Global composite PMI for the US to 47.3 in October, from 49.5, means that indicator has now been below the 50 boom-bust level for four months. Admittedly, the ISM survey indicators remain at much …
24th October 2022
The outperformance of wage growth for those moving jobs is not a signal that overall wage growth is set to accelerate. The decline in job quits and in the share of firms planning pay rises suggests the recent slowdown evident in most measures of annual …
This week’s data releases painted a mixed picture of activity: from the good, to the bad, and the just plain ugly. Manufacturing sector holding up well First the good; manufacturing output increased by 0.4% m/m in September, following decent monthly gains …
21st October 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
Manufacturing can’t defy global slowdown for much longer The 0.4% m/m gain in manufacturing output in September, together with some modest upward revisions to prior months, suggests that the factory sector is just about holding up despite the …
18th October 2022
Manufacturing can’t deft gravity for much longer The 0.4% m/m gain in manufacturing output in September, together with some modest upward revisions to previous months, suggests that the factory sector is just about holding up despite the deterioration in …
We still think it’s only a matter of time before the easing of inflationary pressure evident in the surveys and other private-sector data shows up in the official figures. But the September CPI report points to the Fed hiking by another 75bp not just in …
14th October 2022
Confidence boosted by lower energy prices The University of Michigan’s consumer confidence index rebounded slightly to 59.8 in October, from 58.6, as the impact of lower gasoline prices and still-strong labour market conditions just about outweighed the …
Real consumption growth muted as higher rates bite With retail sales unchanged in September there is still little evidence that the boost to purchasing power from the earlier sharp fall in gasoline prices has helped real consumption. Energy prices are …
Real consumption growth muted as higher rates bite With retail sales unchanged in September there is still little evidence that the boost to purchasing power from the earlier sharp fall in gasoline prices has helped real consumption. Energy prices are now …
While the Fed isn’t likely to follow the Bank of England in pausing QT in response to upward pressure on long-term government bond yields, the reduction of the Fed’s balance sheet could end sooner and be significantly smaller than we had first thought. …
13th October 2022
Continued hot inflation means 75bp hikes could keep coming The stronger than expected 0.4% rise in consumer prices in September, driven yet again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and, in contrast to …
Continued hot inflation raises risks that 75bp hikes will keep coming The stronger than expected 0.4% rise in consumer prices in September, driven yet again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and, in …
Fed remains in hawkish mood for now While the minutes provided some hints that Fed officials are beginning to lay the ground for a slower pace of rate hikes eventually, the overall tone was still hawkish, suggesting that the Fed will push ahead with …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
What could the Fed "break"? The recent liquidity issues faced by UK pensions funds and problems at a few European banks have led to speculation that the Fed’s interest rate hikes will trigger some form of financial instability which, via an adverse …
7th October 2022
Labour market conditions cooling only gradually The 263,000 gain in non-farm payrolls in September is another signal that labour market conditions are cooling. But with the unemployment rate dropping back to 3.5% the report is unlikely to significantly …
Models suggest recession now more likely than not In light of the Fed’s increasingly aggressive monetary tightening, we now think the economy is headed for a mild recession early next year. Our composite tracking models support that forecast, with the …
6th October 2022
Overview – We expect inflation to fall more rapidly than the Fed anticipates, albeit partly because the even-bigger surge in interest rates will send the economy into a mild recession early next year and drive up the unemployment rate. As a result, we …
5th October 2022
Services activity growth looks set for sharper slowdown soon The marginal fall in the ISM services index to 56.7 in September, from 56.9, suggests activity in the sector is still holding up well and leaves a weighted average of the two ISM surveys …
Surging exports keeping economy afloat The further sharp decline in the trade deficit to $67.4bn in August, from $70.5bn, means that net exports provided a big boost to third-quarter GDP growth. But the twin drags from the surging dollar and the …
Surging exports keeping economy afloat The further sharp decline in the nominal trade deficit to $67.4bn in August, from $70.5bn, means that net exports provided a big boost to third-quarter GDP growth. But the twin drags from the surging dollar and the …
The sharp fall in job openings in August will be welcomed by the Fed as a sign that labour market conditions are starting to move back into balance. That won’t prevent further aggressive interest rate hikes in the near term but, with the data suggesting …
4th October 2022
Manufacturing sector slowing; shortages still easing The sharper than expected fall in the ISM manufacturing index to 50.9 in September, from 52.8, leaves it consistent with GDP growth of just 0.5% annualised. The weakness in activity is helping to ease …
3rd October 2022
Manufacturing sector slowing; shortages still easing The sharper than expected fall in the ISM manufacturing index to 50.9 in September, from 52.8, leaves it consistent with GDP growth of just 0.5% annualised. There is at least some comfort, however, that …
Annual revisions show a weak real economy The big gap that had opened recently between the real GDP and real GDI (gross domestic income) data was partly resolved in the annual revision released this week, but not in the way the Fed would have liked, …
30th September 2022
Real consumption growth slowing despite falling gas prices The 0.1% rise in real consumption in August, together with revisions to previous months’ data, leaves consumption on track for growth of only 0.7% annualised in the third quarter, down from 2.0% …
We expect non-farm payrolls to have risen by a solid 275,000 in September, but a much sharper slowdown looks likely as the Fed’s aggressive tightening feeds through. Employment growth has slowed materially from the rapid pace seen at the start of this …
29th September 2022
Revisions fail to change picture of economic weakness The annual revision to the national accounts data were more downbeat than we had expected as they show that the previous big gap between GDP and GDI has been narrowed mainly by the latter being revised …
Orders data suggest equipment investment holding up, for now The 0.2% m/m fall in durable goods orders in August wasn’t as bad as we expected and suggests that business equipment investment is, for now at least, still holding up in the face of surging …
27th September 2022
The Fed’s transformation from inflation-denier back to Volcker-style inflation-slayer is all but complete. As Chair Jerome Powell acknowledged in his press conference this week, “we have got to get inflation behind us. I wish there were a painless way …
23rd September 2022
The Fed stuck to the script in delivering a 75bp rate hike at its September meeting, but in our view still managed to deliver a hawkish message with the accompanying projections , which imply an additional 75bp hike in November and a 50bp move in …
21st September 2022
A hawkish 75bp hike The Fed may have stuck to the script by delivering a 75bp rate hike at its September meeting, but it still managed to deliver a hawkish message with the accompanying projections, which imply an additional 75bp hike in November and a …
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
The economic data this week suggest that slowing activity growth isn’t yet putting downward pressure on core inflation, which is likely to see the Fed remain in hawkish mode at its meeting next week. But we still think that picture could change quite …
16th September 2022
Manufacturing weighed down by global malaise Manufacturing output edged up by 0.1% m/m in August, as notable gains in petroleum & coal, machinery and electronics were partly offset by a drop back in motor vehicles and parts. With global manufacturing …
15th September 2022
Consumers reluctant to spend gasoline savings The stagnation in underlying retail sales in August suggests that plunging gasoline prices are not providing any significant boost to real consumption. But that could change over the coming months as …
