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The trivial decline in the Conference Board measure of consumer confidence in July left the index still at a high level by historical standards. It also supports our view that, after what could turn out to be the biggest quarterly gain in a decade in the …
26th July 2016
Our calculations indicate that second-quarter GDP growth accelerated to 2.5% annualised, thanks primarily to a massive 4.5% surge in real consumption. The latter would mark the biggest quarterly gain in a decade. Although we expect consumption growth to …
25th July 2016
Our calculations indicate that second-quarter GDP growth accelerated to a more respectable 2.5% annualised, following a disappointing 1.1% gain in the first quarter. But be aware that the BEA will also be releasing its annual revisions this week, which …
22nd July 2016
The Fed is very unlikely to spring any surprises at the upcoming FOMC meeting, which concludes next Wednesday 27th July, but a September rate hike is a distinct possibility. The statement next week should acknowledge the apparent pick-up in second-quarter …
20th July 2016
The 0.6% m/m rise in industrial production was better than consensus forecast of a 0.3% m/m gain, primarily because of the stronger-than-expected rebound in manufacturing output. … Industrial Prod. (Jun.) & Cons. Confidence …
15th July 2016
The incoming labour market data, including the strong rebound in June payrolls, have confirmed our suspicions that the big declines in April and May were only a temporary blip rather than the start of a more worrying trend. There are plenty of good …
The unexpected strength of underlying retail sales in June means that second-quarter GDP growth still appears to have been between 2.5% and 3.0% annualised. Real consumption growth will be 4.0%. At the same time, June’s consumer price figures show that …
The latest NFIB and JOLT surveys add to the sharp rebound in June payrolls as evidence that labour market conditions continue to improve, which should generate a more pronounced acceleration in wage growth later this year. … NFIB & JOLT surveys reveal …
12th July 2016
The latest evidence suggests that GDP growth accelerated to around 3% annualised in the secondquarter. Furthermore, the rebound in both of the June ISM surveys suggests that this strengtheningin activity is set to continue. While we are doubtful that the …
8th July 2016
The 287,000 surge in non-farm payrolls in June suggests that the sharp slowdown in the preceding months was nothing more than ablip. Fed officials will want to see evidence of a more sustained recovery inemployment growth over July and August as well. But …
Despite the widening in the nominal trade deficit to $41.1bn in May, from $37.4bn, net trade probably still provided a small boost to second-quarter GDP growth, which we suspect was close to 3% annualised. The rebound in the June ISM non-manufacturing …
6th July 2016
While the UK Brexit vote triggered some initial volatility in financial markets, many of the adverse moves have already been unwound and overall financial conditions in the US remain considerably looser than they were just a few months ago. And with the …
1st July 2016
The rise in the ISM manufacturing index to a 16-month high of 53.2 in June, from 51.3, was much better than consensus expectations and is consistent with GDP growth of a little more than 2%. Indeed, the strength of the recent service sector data suggests …
Our econometric model points to a 150,000 gain in non-farm payrolls in June, thanks in part to the return of 35,000 Verizon workers who were excluded from the payroll survey in May. Under those circumstances, we think the unemployment rate was unchanged …
30th June 2016
The sharp rise in the Conference Board’s measure of consumer confidence in June suggests that the recent acceleration in consumer spending growth is set to continue. … Conference Board Consumer Confidence …
28th June 2016
Despite the apparent slowdown in the labour market, the latest activity data point to a solid rebound in second-quarter GDP growth. Growth in underlying retail sales reached a two-year high in May, suggesting that real consumption growth accelerated to at …
Despite the slowdown in the first quarter, the incoming monthly data point to a big rebound in second-quarter GDP growth and we still expect growth for 2016 as a whole to be 2.0%. The UK’s vote to leave the EU will have no meaningful impact on the US …
27th June 2016
The growth rate of average hourly earnings has accelerated to 2.5%, from a norm of nearer 2.0% in recent years, and other measures like the Atlanta Fed’s tracker suggest that median wage growth is closer to 3.5% now. It is not all good news, however, with …
24th June 2016
The 2.2% m/m decline in headline orders last month undershot consensus expectations for a more modest 0.5% m/m decline partly because of a weaker than expected gain in the notoriously volatile commercial aircraft category. Nevertheless, the weakness in …
The UK vote to leave the European Union (EU) has inevitably triggered an immediate negative reaction in global financial markets, but we do not anticipate a significant sustained tightening in US financial conditions. As a result, we don’t expect the UK …
The key US event this week will be Fed Chair Janet Yellen’s semi-annual testimony to Congress. She will be testifying to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. We expect her to add little to what …
17th June 2016
Headline CPI inflation remained well below the Fed’s target in May, but base effects will push it well above 2% by early next year. Both headline and core consumer prices increased by a solid 0.2% m/m in May. Annual headline inflation fell back slightly …
16th June 2016
Despite leaving its economic projections largely unchanged today (GDP growth expectations were revised down slightly, inflation forecasts were revised up slightly) the FOMC nevertheless cut its interest rate projections quite sharply, suggesting it has …
15th June 2016
The 0.4% m/m decline in industrial production in May, which was slightly worse than consensus expectations, was largely due to a similar-sized slump in output in the struggling manufacturing sector. … Industrial Production …
The latest NFIB survey suggests that small businesses are still intent on hiring additional workers, even though finding suitably qualified employees is getting harder. Unfortunately, small businesses show little desire to boost capital expenditures. … No …
14th June 2016
The strength of the May retail sales report should provide plenty of comfort to those concerned that the recent slump in payrolls would be followed by a downturn in activity. It still appears that second-quarter GDP growth will rebound to between 2.5% and …
The decline in long-term inflation expectations to a record low in the University of Michigan’s June consumer confidence survey won’t prevent the Fed from raising interest rates, not least because most other measures show that inflation expectations …
13th June 2016
There are one or two genuine reasons to worry about the strength of the labour market. But the deeper we dig, the more we’re convinced the spring slowdown in payroll employment growth is a temporary hangover after the record warm fall and winter. The last …
10th June 2016
The University of Michigan’s consumer confidence measure was broadly unchanged at an elevated 94.3 in June, which suggests the pick-up in second-quarter consumption growth will continue into the second half of this year. … UoM Consumer Confidence …
The sudden stop in employment growth rules out any chance of a rate hike from the Fed at next week’s FOMC meeting, particularly now that the UK vote on whether to leave the European Union (EU) appears to be going down to the wire. A quick rebound in …
8th June 2016
The recent rally in oil prices is a positive for the US economy insofar as it confirms that the drag from falling mining investment will fade by the second half of the year. And with households having built up their savings in response to the prior …
6th June 2016
The rising business inventory-to-sales ratio is not a signal of an imminent recession. The increase in the ratio of some specific components – machinery – is a potential problem. But much of the rise in recent years is instead due to a compositional …
3rd June 2016
The 38,000 increase in non-farm payrolls in May, which is still only 73,000 if we adjust for the 35,000 striking Verizon workers, means that a June rate hike from the Fed is now very unlikely. (Consensus forecast 160,000, CE forecast 120,000.) A July hike …
The increase in the ISM manufacturing index to 51.3 in May, from 50.8, still leaves it at a level that has historically has been consistent with GDP growth of only 2%. But the services side of the economy is doing much better and actual second-quarter GDP …
1st June 2016
The robust growth in bank loans and the monetary aggregates is another reason to believe that second-quarter GDP growth will rebound markedly. The growth rate of our M3 measure accelerated to 4.0% in April, from 3.8%. … Monetary Indicators Monitor …
31st May 2016
The decline in the Conference Board measure of consumer confidence to 92.6 in May, from 94.7, could potentially be the first signal that the presidential election is beginning to weigh on the economy. Admittedly, the alternative University of Michigan …
Markets are coming around to the idea that the Fed will raise rates for a second time either next month or in July, but still appear to be unusually sanguine about the prospects of additional rate hikes beyond then. We agree that the Fed will probably …
27th May 2016
Our econometric model points to a solid 170,000 gain in non-farm payrolls in May, but after we allow for the impact of the Verizon strike and other temporary factors, the actual gain in employment was probably as low as 120,000. Under those circumstances, …
26th May 2016
The 3.4% m/m surge in durable goods orders in April was principally due to a 64.9% m/m jump in the notoriously volatile commercial aircraft component, which will probably be reversed in May. Otherwise, capital goods orders and shipments remain unusually …
The minutes of the April FOMC meeting and subsequent comments by various Fed officials have prompted speculation that the Fed could raise interest rates as soon as next month. Treasury yields have rebounded sharply. We always said the June meeting was a …
25th May 2016
Our central theme that the Fed will be forced to raise rates much more aggressively than markets expect continues to unfold. The two deflationary shocks of 2015 – the surge in the dollar and the slump in commodity prices – are fading rapidly. Consumer …
20th May 2016
The 0.4% m/m increase in consumer prices was the biggest gain since February 2013 and reflects primarily a strong rebound in energy prices. More generally, the rebound in commodity prices we’ve seen in recent months suggests that the annual headline …
17th May 2016
While we didn’t think that the more modest 160,000 increase in payroll employment in April necessarily ruled out the possibility of a June rate hike by the Fed, the increasing probability that employment will be even weaker in May probably does. Under …
13th May 2016
The retail sales and consumer confidence reports show that recent claims of the demise of the US consumer have been greatly exaggerated. Thanks to a massive 0.9% m/m gain in control sales in April and a sizeable rebound in motor vehicle sales, it now …
The latest NFIB and JOLT surveys suggest that, contrary to the already reported slowdown in the pace of monthly payroll gains in April, labour market slack is still shrinking. That should eventually generate a marked acceleration in wage growth. … NFIB …
10th May 2016
The incoming data were fairly positive last week. The rebound in the non-manufacturing surveys more than made up for the continuing softness in the manufacturing surveys, while the sharp recovery in motor vehicle sales last month underscores that news of …
6th May 2016
The more modest 160,000 gain in non-farm payrolls in April will have caught a few people out, after all the consensus forecast was as high as 200,000, but the out-turn was broadly in line with our own 170,000 estimate. Employment was never going to …
While the drag on GDP growth from the manufacturing slump may fade in the second half of this year, the sector is unlikely to make any major positive contribution to the economy for some time yet. Nevertheless, with the prospects looking good for a …
5th May 2016
The decline in the trade deficit to a 13-month low of $40.4bn in March, from $47.0bn, was largely due to seasonal distortions created by the shifting date of the New Year holiday in China. … International Trade (Mar.) & Productivity …
4th May 2016
Although the annual growth rate of our own M3 measure was a still muted 3.8% in March, the strength of M2 growth, at 6.2%, and bank loan growth, at 7.8%, underscores that there is nothing in the monetary indicators to suggest the economy is in any danger …
