Filtered by Subscriptions: US Economics Use setting US Economics
The drop in the Conference Board consumer confidence index to 78.1 in February, from 79.4, was probably weather-related, with a massive storm hitting the eastern seaboard during the sample period. Now that the weather is slowly returning to seasonal norms …
25th February 2014
With the unemployment rate falling to 6.6% in January, leaving it only trivially above the 6.5% threshold, the Fed will soon need to update its forward guidance on when it might begin to raise the fed funds rate from near-zero. We suspect that rather than …
24th February 2014
Most of the recent weakness in housing activity is due to the unusually bad weather rather than the lagged effects of last year’s rise in mortgage rates. While higher mortgage rates have clearly taken some steam out of the housing recovery, they won’t …
It’s possible that the unusually bad weather is masking a strengthening in underlying consumer price pressure that will only become clear in a few months’ time. Despite the fall to 1.6% in January, core CPI inflation may soon head back towards 2.0%. … …
20th February 2014
The revamp of the producer prices data has made the release much more comprehensive, but it hasn’t changed the bigger picture. There is not much sign of any near-term inflationary pressure. … Producer Prices …
19th February 2014
Broad money growth appears to have stabilised, with our measure of the M3 aggregate rebounding slightly to 4.6% in January, from 4.4%. (See Chart below.) Elsewhere, the slowdown in the growth rate of bank loans primarily reflects the impact that higher …
18th February 2014
January’s industrial production data join a growing list of economic releases affected by the unusually bad weather. Given that the weather has been just as severe in February, the lost output may not be recouped until at least March. … Industrial …
14th February 2014
Our best guess is that the severe weather has played a key role in the apparent deterioration in the incoming economic data for December and January. With much of the country currently digging out from another major storm, the weather could also affect …
13th February 2014
Some of the weakness in retail sales in January was probably due to the bad weather. Nonetheless, it looks as though GDP growth in both the fourth quarter of last year and the first quarter of this year could be a little weaker than we previously thought. …
The two key takeaways from new Fed Chair Janet Yellen's first congressional testimony on monetary policy is that neither the recent drop off in the pace of employment growth nor the turmoil in emerging markets will prevent the FOMC from continuing to …
11th February 2014
The latest improvements in small business hiring and labour market turnover indicate that the fall in the unemployment rate may be a more accurate gauge of labour market slack than the Fed currently believes. Moreover, these two surveys suggest that a …
With the unemployment rate falling to 6.6% in January, putting it very close to the Fed's threshold level of 6.5%, new Chair Janet Yellen could use her congressional testimony this week to signal how the FOMC's forward guidance might evolve. Fed officials …
10th February 2014
In her semi-annual monetary policy testimonies to Congress this week, we expect new Fed Chair Janet Yellen to emphasise that the weak tone of some of the incoming data and the turmoil in emerging markets are not enough to prompt the Fed to slow the pace …
The disappointing 113,000 increase in non-farm payrolls in January cannot be blamed on the weather but, nonetheless, with the unemployment rate continuing to edge lower, to only 6.6% last month, we expect the Fed to maintain its policy of reducing the …
7th February 2014
Low vacancy rates, falling unemployment and faster earnings growth will drive the rents inflation higher over the next year or two. In addition to signs that wage growth is poised to accelerate, this is another reason to believe that core inflation, which …
6th February 2014
The rebound in the monthly trade deficit to $38.7bn in December, from $34.6bn, means that fourth-quarter GDP growth will likely be revised down slightly to about 2.9% annualised in the second estimate, from the initial 3.2%. … International Trade …
The decline in the Federal budget deficit over the past few years has been impressive, but the longer-term budget challenges linked principally to the aging of the population have still to be resolved. … Federal budget improvement may not …
4th February 2014
The sharp drop in January's ISM manufacturing index has led to some speculation that the US recovery might be coming off the rails, particularly as it followed an unexpectedly weak gain in payroll employment in December. We think these fears are overdone. …
The revamp of the producer prices data will provide a more comprehensive measure of pipeline price pressures, but it may not give us a greater insight into where consumer price inflation is heading. … New PPI data won't predict CPI inflation any …
The Fed's latest Senior Loan Officer Survey indicates that the jump in borrowing costs last year is still undermining demand for residential mortgages. The more recent drop back in mortgage rates could provide some much-need support, but not until later …
3rd February 2014
The unexpected plunge in the ISM manufacturing index to an eight-month low of 51.3 in January, from 56.5, appears to have more to do with the unseasonably severe winter weather, than a major slowdown in both domestic and overseas activities. … ISM …
The Fed is only concerned with the US economy's performance and the recent bout of emerging market turmoil poses little threat to that. It is worth remembering that despite the currency crises which spread through Asia in 1997 and 1998, which were …
Our econometric model suggests that the sharp slowdown in jobs growth in December, which resulted in payroll employment rising by just 74,000, was due to temporary factors that are unlikely to have been repeated in January. We estimate that payrolls rose …
31st January 2014
When we take into account the near three-week Federal government shutdown at the start of the quarter, the 3.2% annualised gain in fourth-quarter GDP growth is pretty impressive, particularly since it followed a 4.1% gain in the third. The broader picture …
30th January 2014
Despite last minute suggestions from some commentators that the emerging markets wobble could prompt a delay, the Fed opted to continue the gradual winding down of its asset purchases today, reducing them by another $10bn a month to $65bn. It also issued …
29th January 2014
In spite of the unseasonably severe winter weather, the Conference Board measure of consumer confidence rose to 80.7 in January, from 77.5. This probably reflects the continued improvement in labour market conditions and the strength of stock markets …
28th January 2014
The 1.0% m/m decline in durable goods orders was mainly due to a drop back in the notoriously volatile commercial aircraft component. More generally, there is some evidence that the growth rate of equipment investment is strengthening but, as with much of …
The rebound in US export growth late last year can be linked directly to strengthening demand in both China and the euro-zone. Given that growth in China is now slowing and that the dollar is strengthening against the euro, US exports are unlikely to …
27th January 2014
The current rates of wage and price inflation may be unusually low, but we are becoming increasingly concerned that the dwindling slack in the labour market will trigger a rise in wage inflation this year. Barring an unexpected acceleration in …
23rd January 2014
Despite the modest 74,000 increase in payroll employment in December, we expect the Fed to stick to its existing plans and reduce the monthly asset purchases by a further $10bn, to $65bn, at the upcoming FOMC meeting that concludes next Wednesday. … Fed …
22nd January 2014
Our estimate that GDP grew at a decent annualised rate of 3.5% in the fourth quarter even though activity was hit by the Federal government shutdown and the unusually bad weather suggests that the economic recovery has become more robust. The slowdown in …
21st January 2014
Our latest calculations indicate that fourth-quarter GDP growth was as much as 3.5%. (We have raised our estimate from 3.0% on the back of the release of December's retail sales figures and November's business inventory numbers.) Moreover, we estimate …
20th January 2014
Despite record high stock markets and gradually improving labour market conditions, the University of Michigan's measure of consumer confidence dropped back to 80.4 in January, from 82.5. Nevertheless, the headline index only reversed a small part of …
17th January 2014
With both domestic and overseas demand improving, the timid increase in industrial production in December does little to alter our view that 2014 could be a stellar year for American producers. … Industrial Production …
With core CPI inflation steady at 1.7%, as upward pressure from shelter inflation offset a fall in medical care inflation, December’s CPI data won’t prevent the Fed from further trimming its asset purchases at the policy meeting late this month. … …
16th January 2014
Broad money growth continues to slow but, given the rebound in long-term interest rates over the past six months, we suspect that moderation reflects a waning speculative demand for money and is not a signal that the economic recovery is in peril. The …
15th January 2014
Although the modest 0.2% m/m gain in December's retail sales suggests that retailers had a disappointing holiday season, the truth is that underlying spending was strong. Indeed, over the fourth quarter as a whole, it appears that real consumption …
14th January 2014
America will import fewer barrels of oil both this year and next but, while this will narrow the trade deficit a bit, it won’t provide a major boost to the economy. … America will further reduce its reliance on oil …
The markets are happy to take the Fed at its word that it won't begin to raise rates until mid-2015 and will tighten only gradually after that, but we fear that rising wage and price inflation will force a more aggressive series of rate hikes. We agree …
13th January 2014
The unusually cold winter weather may take some of the heat out of the economic recovery, but the adverse impact will be small for two reasons. First, the hit to activity will be cushioned by households spending more to heat their homes. Second, most of …
We suspect that the unexpectedly weak 74,000 gain in non-farm payrolls in December is largely explained by the unseasonably severe winter weather last month. Under those circumstances, we still expect the Fed to reduce its monthly asset purchases by a …
10th January 2014
The trade deficit unexpectedly shrank to a four-year low of $34.3bn in November, from $39.3bn, suggesting that fourth-quarter GDP growth could turn out to be above 3.0% annualised. … International Trade …
7th January 2014
Our econometric model points to a healthy 200,000 gain in non-farm payrolls in December, although we suspect that the unemployment rate was probably unchanged at 7.0%. … Labour market conditions still improving …
6th January 2014
2014 could be the year that the economic recovery finally kicks into a higher gear. The big difference is that the headwinds that have hampered growth in recent years are fading, while the tailwinds that are boosting some parts of economy are …
The tiny fall in the ISM manufacturing index in December did little to dampen the usual New Year optimism as the survey remains consistent with annualised GDP growth of a healthy 3%. … ISM Manufacturing Index …
2nd January 2014
The better-than-consensus 3.5% m/m jump in durable goods orders in November, although partly due to a bounce back in the volatile aircraft category, suggests that fourth-quarter business investment in equipment may have picked up a bit. … Durable Goods …
24th December 2013
We weren’t surprised by the Fed’s decision to begin tapering its monthly asset purchases, but we didn’t anticipate that it might not halt those purchases completely until late next year. As the tapering process will be more gradual than expected, it …
23rd December 2013
Our non-consensus view that the Fed would begin to wind down its monthly asset purchases without further delay in December was proved correct. As we suggested, at the conclusion of the two-day FOMC meeting today, the Fed announced that it would trim its …
18th December 2013
The recent pick-up in the growth rate of underlying retail sales suggests that we are finally seeing a strengthening in domestic demand. It may well be sustained too. Coming out of the recession, the lingering effects of the financial crisis and the …
17th December 2013
We’re not convinced that the low rate of inflation in November will prevent the Fed from announcing tomorrow that it will begin to taper its asset purchases, although the decision remains finely balanced. … Consumer Prices (Nov.) & Current Account …
