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The fall in industrial production in August was just due to problems seasonally adjusting autos production and is therefore not a sign that the recovery is running out of steam. The more upbeat survey evidence emphasises that industry remains healthy. … …
15th September 2014
Even a further rise in the dollar above its current four-year high won’t prevent a period of higher inflation and stronger GDP growth. It would be odd to conclude that the dollar will significantly weaken economic growth when it is the stronger economy …
12th September 2014
The solid rise in retail sales in August, together with the upward revision in July, suggests that annualised real consumption growth in the third quarter as a whole will come in between 1.5% and 2.0%. That’s a bit stronger than we previously expected. … …
The Fed will continue to trim its asset purchases at the upcoming FOMC meeting, which concludes on the 17 th September. There is the possibility that it could also tweak its forward guidance and/or provide more details on its exit strategy. We wouldn't be …
10th September 2014
The latest NFIB small business and JOLTS surveys indicate that the disappointing gain in payroll employment in August was just a blip rather than the start of a major slowdown. What’s more, the surveys still suggest that the tightening in the labour …
9th September 2014
We’re not convinced that equity prices will continue to boost consumer confidence, but an acceleration in wage growth should allow confidence to rise further above its long run average. … Confidence to continue …
8th September 2014
Last week was the best of times and the worst of times. Just as it looked as though the US recoverywas finally moving into a higher gear, as credit conditions eased and the fiscal drag faded, the142,000 gain in August payrolls sparked fears of another …
5th September 2014
The modest 142,000 increase in non-farm payrolls in August, which was well belowthe consensus forecast at 230,000 and the smallest gain this year, will inevitably sparkspeculation that the US recovery is somehow coming off the rails again. We're not too …
The further decline in the trade deficit to a six-month low of $40.5bn in July, from $40.8bn the month before, suggests that net external trade will make a larger positive contribution to third-quarter GDP growth than we had expected, perhaps adding …
4th September 2014
The labour market conditions index referred to by Fed Chair Janet Yellen in her speech at Jackson Hole doesn’t tell us anything that we don’t already know. Moreover, it may not be very useful in the current situation since it places little weight on …
29th August 2014
Our econometric model implies that the easing injob growth and the rise in the unemployment ratein July were just blips in otherwise improvingtrends. We estimate that payroll employment roseby around 225,000 in August and that theunemployment rate fell …
28th August 2014
The CBO’s latest budget projections highlight the extent of the improvement in America’s fiscalposition in recent years. At the same time, the CBO appears to agree with the Fed’s assessment thatthere is still a “significant” amount of slack in the labour …
27th August 2014
Both businesses and households have started to enjoy the fruits of an economicrecovery that appears to be becoming stronger and more widespread. A weightedaverage of the two ISM business activity indices rose to an eight-year high in Julywhile the …
The rise in the Conference Board measure of consumer confidence in August to itshighest level since before the recession looks a bit odd when other measures ofconfidence have weakened. Nonetheless, this adds to the recent evidence that the USeconomy is …
26th August 2014
July’s spectacular durable goods orders provide a misleadingly strong signal on thestrength of the economy, although the outlook for business investment is improving. … Durable Goods …
If the release of the minutes of July’s FOMC meeting on Wednesday suggested that the Fed had takentwo steps closer to raising interest rates, then today’s speech by Fed Chair Janet Yellen at Jackson Holecould be interpreted as it taking one step back. …
22nd August 2014
The main reason why the stock of loans to small businesses has yet to surpass its previous peak is because weak sales have restrained the demand for new borrowing. The recent rise in the NFIB small business optimism index and improvement in the NFIB …
The minutes of the FOMC meeting that took place at the end of July suggest that the Fed has takenanother step closer towards raising interest rates. This is consistent with our view that “lift-off” willtake place in March next year. … Fed moving closer to …
21st August 2014
The recent rapid rise in bank loans, which is partly being driven by auto loans, is not a cause for concern and instead is a sign that the economy is becoming stronger. … Monetary Indicators Monitor …
20th August 2014
The recent slowdown in the pace at which core consumer prices are rising eases some of the pressure on the Fed to start considering rate hikes, although only temporarily. … Consumer Prices …
19th August 2014
Federal Reserve officials will be heading to their annual policy get together at Jackson Hole later this week. We expect little in the way of direct insights into the monetary policy outlook. Nevertheless, the focus on labour market dynamics could throw …
18th August 2014
The decline in the University of Michigan's consumer confidence index to an eight-month low of 79.2 in August, from 81.8, principally reflects the drop back in stock markets over the past few weeks. With equity prices now rising, it won’t be long before …
15th August 2014
The surge in industrial production in July offsets the weaker news on retail salesreleased earlier this week, suggesting that the recovery remains intact. … Industrial Production & Producer Prices …
The NY Fed's latest data on household debt help to alleviate concerns that a bubble in sub-prime auto loans is forming. Relative to households incomes, auto loan debt is still at comparatively low levels and the value of loans begin taken out by those …
14th August 2014
The ISM activity indices have risen to levels that previously prompted the Fed to raise interest ratesand the yield curve to steepen. This is unlikely to force the Fed into action immediately – in 2004 itwaited a further six months before increasing …
The weakness of retail sales in July is at odds with the recent acceleration in income growth, rises in household wealth and greater availability of credit, which all suggest that the outlook for consumption is improving. … Retail Sales …
13th August 2014
We believe that the slack in the labour market is dwindling and we expect a resulting accelerationin wage growth to be one of the big stories over the next 12 months. Unless productivity growth breaks out of its slump, that acceleration in wage growth …
12th August 2014
Recent trends in the small business sector suggest that the labour market has continued to strengthenand that the loosening in credit conditions will allow businesses to boost investment. … Credit flowing more freely to small …
The recent fall in equity prices and stagnation in house prices has not taken much of the gloss off the strengthening in the other economic news. As such, the economic outlook is even brighter now than it was a couple of weeks ago. … Outlook …
11th August 2014
Most monetary policy rules, many of which suggest that interest rates should already have risen, arelargely useless in the post-crisis world. If we make adjustments to allow for a lower neutral rate and thepossibility that there is more labour market …
The decline in the monthly trade deficit to a five-month low of $41.5bn in June, from$44.7bn, means that second-quarter GDP growth will be revised even higher from theinitial estimate of 4.0% annualised to about 4.2%. … International Trade …
6th August 2014
The strengthening in mortgage demand evident in the Fed’s latest Senior Loan Officer Survey suggeststhat the housing recovery is back on track after having stalled in the first half of the year. Meanwhile,the further rise in the demand for business loans …
5th August 2014
The rise in the ISM manufacturing index to a three-year high in July suggests that the third quarter began on a high note. The index is consistent with the 4.0% annualised gain in GDP in the second quarter being followed by a rise of up to 3.5% in the …
1st August 2014
Consumption growth has been remarkably stable at around 2% since the recovery began in mid-2009. Nevertheless, we anticipate that the pick-up in income growth and past gains in householdwealth will fuel an acceleration in consumption growth to around 2.7% …
It is a sign of how far the US economy has come in recent months that the 209,000increase in non-farm payroll employment in July will probably be viewed as adisappointment in the markets. The consensus forecast was as high as 230,000.Admittedly, the …
The Fed's policy announcement was largely as expected, with the monthly asset purchases reduced by an additional $10bn, to $25bn per month. But subtle changes to the statement and Philadelphia Fed President Charles Plosser's dissent suggest that the hawks …
30th July 2014
Not only did second-quarter GDP rebound by 4.0% annualised, but the decline in thefirst quarter was trimmed to 2.1%, from 2.9%, and other revisions show the economygrowing at an even faster pace than previously believed in the second half of last year. … …
The surge in the Conference Board's consumer confidence measure to a six-and-a-half year high of 90.4 in July, from 86.4 in June, looks a bit suspicious, even if we allow for the recent drop back in gasoline prices over the past couple of weeks. … Surge …
29th July 2014
Although the trade deficit has widened in recent months, the increase is largely due to the strength of imports rather than the weakness of exports. Our calculations suggest that exports increased at a very healthy double-digit annualised pace in the …
We expect this week’s release of the preliminary estimate of GDP in the second quarter to reveal thatgrowth rebounded at an annualised rate of 3.2% after the 2.9% contraction in the first quarter. Therisks around that forecast, however, are larger than …
28th July 2014
June’s durable goods orders data suggest that the rebound in business investment inthe second quarter was a bit smaller than we had been expecting. Nonetheless,annualised GDP growth in the second quarter was probably still around 3.2% andJune’s orders …
25th July 2014
Our econometric model suggests that non-farmpayroll employment increased by around 225,000in July. That would be smaller than June’s increaseof 288,000, but it would still be consistent withjob growth having accelerated in recent monthsand should be …
24th July 2014
With no new economic projections due and nopress conference scheduled, the FOMC policymeeting that ends on Wednesday 30th should be aquiet affair with the only major development beinga further tapering of the monthly asset purchases,to $25bn from $35bn. …
23rd July 2014
The softer tone of June’s consumer price figures does little to change our view that core inflation will rise faster than the Fed expects. There is still plenty of evidence that the decline in spare capacity is boosting price pressures in some sectors. … …
22nd July 2014
The weakness of business investment over the past couple of years has been disconcerting, but arange of indicators point to a much stronger showing in the second quarter while, more generally, rising capacity constraints point to stronger growth over the …
21st July 2014
A cyclical rise in wage growth appears to be underway in some sectors of the economy and in some US States. This suggests it is only a matter of time before the decline in the national unemployment rate triggers an acceleration in overall wage growth. …
The acceleration in the growth rates of both bank loans and our measure of M3 inthe first half of the year suggest that the economic recovery has continued tostrengthen. … Monetary Indicators Monitor …
The rise in gasoline prices was behind the dip in consumer confidence in July. But rising equity prices and the improving labour market should help consumer confidence to increase before too long. … Uni. of Mich. Consumer Confidence …
18th July 2014
The weakness of business investment over the past couple of years has been disconcerting, but a range of indicators point to a much stronger showing in the second quarter while, more generally, rising capacity constraints point to stronger growth over the …
The modest 0.1% m/m gain in manufacturing output in June looks disappointing, but the manufacturing sector actually enjoyed a strong second quarter and the improvement in the survey evidence points to an even better performance in the second half of this …
16th July 2014
