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A drop back in gasoline prices restricted consumer prices to a more modest 0.1% m/m gain in February, but unfavourable base effects nevertheless pushed the annual CPI inflation rate up to a five-year high of 2.7%, from 2.5%. … Consumer Prices & Retail …
15th March 2017
After the Fed’s co-ordinated attempts to prepare markets for another interest rate hike at this week’s FOMC meeting, which concludes on Wednesday, another 25 basis point hike is fully priced into markets. Buoyed by the post-election improvement in the …
10th March 2017
The 235,000 gain in non-farm payrolls in February will erase any lingering doubts that the Fed might not hike interest rates next week. It will also be greeted with a cheer from the White House. … Employment Report …
With the prospect of an early deal on tax reform fading fast, we now assume that the fiscal stimulus won’t be passed by Congress until the start of next year and, as a result, we are revising down our GDP growth forecast for 2017 and revising up our …
8th March 2017
Last week Fed officials acted on a clearly preconceived plan to prepare markets for another interest rate hike at the upcoming FOMC meeting, which finishes on Wednesday 15th March. Buoyed by the post-election improvement in the survey evidence and perhaps …
President Donald Trump’s revised travel ban will have little impact on the wider economy. But his plans for a broader crackdown on immigration, which also include building a wall on the Mexican border, could become a more significant restraint on labour …
7th March 2017
The sharp widening in the trade deficit in January to its highest level in almost five years appears to have been partly due to distortions caused by the earlier than normal Chinese New Year Holiday. With imports likely to have dropped back in February, …
Fed officials appear to have embarked on a co-ordinated attempt to prepare markets for another interest rate hike at the upcoming FOMC meeting in mid-March. The improvement in the survey evidence would certainly seem to justify additional monetary …
3rd March 2017
The strength of the survey evidence suggests that non-farm payroll employment increased by an even stronger 240,000 in February, which should have been enough to bring the unemployment rate back down to 4.7%. … January strength was no …
2nd March 2017
The rise in the ISM manufacturing index in February suggests that the factory sector is experiencing a resurgence after the weakness over the past couple of years. It also suggests that GDP growth is set to pick up in the first quarter. Unfortunately, …
1st March 2017
President Donald Trump's speech to a joint session of Congress this evening offered only a little additional clarity on the tax reforms and additional spending the White House will be seeking from Congress. With Congress getting bogged down by Republican …
The rise in the Conference Board measure of consumer confidence in February leaves the index at a 15-year high and suggests that consumption growth will remain robust. … Conference Board Consumer Confidence …
28th February 2017
The rebound in durable goods orders in January was entirely due to a strong rise in commercial aircraft orders. The underlying details of the report were a little disappointing, but the survey evidence suggests that business equipment investment should …
27th February 2017
This Tuesday evening, President Donald Trump will address a joint session of Congress, which is the traditional forum for new Presidents to unveil details of their economic plans. With Trump hinting in recent weeks that a “major” announcement on taxes is …
24th February 2017
The rise in CPI inflation to a five-year high of 2.5% in January was principally due to a surge in gasoline prices, which appears to have been partly reversed in February. Nevertheless, with headline inflation now much closer to the Fed’s target, it will …
22nd February 2017
The changes to the official trade statistics apparently being considered by the Trump administration may bolster the case for renegotiating trade deals, but they would give a distorted picture of international trade. That said, the changes are unlikely to …
The rise in the NFIB index in January indicated that, in the aftermath of President Donald Trump’s election victory, small business owners were the most optimistic they had been in more than a decade. The extent of the improvement in small business …
17th February 2017
On balance, we still don’t think the Fed will raise interest rates at the March FOMC meeting, but the bigger than expected 0.6% m/m surge in consumer prices in January, which pushed the annual CPI inflation rate up to a five-year high of 2.5%, from 2.1%, …
15th February 2017
Fed Chair Janet Yellen at least kept the possibility of a March rate hike alive in today’s Congressional testimony, but she offered no strong hints that such a move was actually coming and we still think the FOMC will wait until June. According to Yellen, …
14th February 2017
The decline in the University of Michigan measure of consumer confidence in February probably just represents some payback after the surge seen in the aftermath of Donald Trump’s election victory in November. In any case, the index remains at a very high …
10th February 2017
The flurry of executive orders slowed to a crawl last week, suggesting that President Donald Trump and his administration have realised that there are limits on his ability to govern by diktat. If Trump wants to achieve anything of substance, it will …
We will probably never know whether President Donald Trump really did phone his National Security adviser at 3am to ask whether a strong or weak dollar was good for the economy, but it is a very good question. A few years ago, when unemployment was high …
8th February 2017
The Trump administration’s alarming tendency to dismiss objective facts as “fake news”, which can be countered with their own “alternative facts”, has led to claims that the President and his team could seek to politicise US statistics. While falsifying …
7th February 2017
The marginal decline in the nominal trade deficit in December was broadly in line with expectations and confirms that net trade was a big drag on fourth-quarter GDP. But that fourth-quarter drag was entirely due to a drop back in soybean exports following …
The statement released after last week’s FOMC meeting suggests that the Fed will remain in wait and see mode until it gets more clarity on the size, composition and timing of the fiscal stimulus being planned by the Trump administration. Until that time, …
3rd February 2017
January’s strong gain in non-farm payrolls suggests that the labour market started the year on a solid footing. However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June. … Employment …
At the conclusion of its two-day FOMC meeting, the Fed issued a near-identical statement to the one released in December, which strongly suggests it has no intention of raising interest rates again at the upcoming March meeting. Given the current …
1st February 2017
The rise in the ISM manufacturing index to 56.0 in January, from 54.5, confirms that the manufacturing recovery has continued into the New Year, and also suggests that GDP growth is set to rebound in the first quarter. … ISM Manufacturing Index …
The small decline in the Conference Board measure of consumer confidence in January brings the index a little closer in line with other measures of confidence, and still leaves it consistent with stronger real consumption growth in the first quarter. … …
31st January 2017
Despite the chaos of the first week of Donald Trump’s presidency, financial markets have so far been remarkably unperturbed. But if Trump’s incendiary executive orders damage the prospects of more important economic measures, such as the planned fiscal …
President Donald Trump sees the renegotiation of NAFTA as an opportunity to close the trade deficit with Mexico and return manufacturing jobs to the US. It’s possible that he could gain modest concessions while leaving the rest of the treaty broadly …
27th January 2017
We would be wary of reading too much into the slowdown in GDP growth from 3.5% annualised in the third quarter to 1.9% in the fourth, because the temporary spike in soybean exports boosted the former and was a drag on the latter. More generally, after a …
We expect a slightly stronger 170,000 increase in non-farm payrolls in January. Base effects mean that the annual growth rate of average hourly earnings probably edged down to 2.8%, from 2.9%, but that is likely to be only a temporary blip with wage …
26th January 2017
Following its rate hike at last December’s meeting, the Fed will remain in wait-and-see mode until it has more clarity on the magnitude, composition and timing of the anticipated fiscal stimulus. We expect no change at next week’s FOMC meeting, which …
25th January 2017
President Donald Trump’s inauguration speech left no one in any doubt that his administration will pursue trade protectionism aggressively. He argued for putting “America first” and that “protection will lead to prosperity”. The former echoes back to …
23rd January 2017
With base effects helping to lift headline inflation back above 2% in December, we expect an acceleration in wage growth along with a stimulus-fuelled pick-up in GDP growth to drive both headline and core CPI inflation above 3% by the end of this year. …
20th January 2017
Although President-elect Donald Trump is concerned it would be “too complicated”, the House Republicans’ proposal to transform the corporate tax into a so-called destination based cash flow tax (DBCFT) still represents one of the most practical ways to …
18th January 2017
With the earlier sharp falls in energy prices now dropping out of the annual comparison, base effects helped to lift headline CPI inflation back above 2% in December, for the first time since mid-2014. Underlying price pressures remained relatively …
The 0.6% m/m gain in December’s retail sales appears healthy enough, but looking past the headline there are a few concerns about the strength of consumer spending. That headline gain was principally due to a 2.4% m/m rise in motor vehicle sales and a …
13th January 2017
Two months after his surprise election night victory, Donald Trump will be inaugurated as the 45th President of the United States this Friday. We said on election night that, more than anything else, his victory would bring lasting uncertainty and …
Manufacturing appears to be slowly pulling out of its recent slump stemming from the big surge in the dollar in 2014 and 2015, with the ISM manufacturing index and manufacturing employment both improving in December. The more recent dollar appreciation …
6th January 2017
The more modest 156,000 increase in non-farm payrolls in December suggests that labour market conditions weakened just a fraction in the closing stages of last year. Nevertheless, that is still a solid gain, particularly as it followed an even bigger …
The improvement in the ISM manufacturing index to a two-year high of 54.7 in December, up from 53.2 the month before, is another indication that the negative impact stemming from the big surge in the dollar in 2014 and 2015 is now fading rapidly. The …
3rd January 2017
We estimate that non-farm payroll employment growth picked up to 200,000 in December. And although the unemployment rate may have edged back up to 4.7%, this would still leave it below Fed officials’ estimate of its long-run natural rate. In this context, …
November’s durable goods and personal spending reports are consistent with our existing forecast that fourth-quarter GDP growth will be a more modest 2.2% annualised, following an upwardly revised 3.5% gain in the third quarter. It appears that business …
22nd December 2016
The switch to a so-called ‘border adjustment’ system of corporate tax, which was included in the House Republicans’ ‘Better Way’ proposals earlier this year, is beginning to draw more attention in the markets because of the scope for some very big winners …
The survey evidence has strengthened considerably in recent months and even though fourth-quarter GDP growth will probably fall back to 2.2% annualised, as the third-quarter spike in exports is reversed, the outlook for 2017 is encouraging. Assuming a …
19th December 2016
The lack of a sustained acceleration in wage growth suggests the Fed will be in no rush to hike rates again early next year. The stagnation in productivity, however, means that even the current level of hourly wage growth could soon feed through into …
16th December 2016
Donald Trump’s surprise win in the Presidential election has introduced uncertainty across a number of policy dimensions, but the likelihood of a significant fiscal stimulus next year points to a pick-up in GDP growth and inflation. That stimulus will …
15th December 2016
Base effects helped push headline CPI inflation up to 1.7% in November, from 1.6%, but the muted rise in core consumer prices, which left core CPI inflation unchanged at 2.1%, suggests that underlying price pressures are building only gradually. … …
