Filtered by Subscriptions: US Economics Use setting US Economics
The indicators that provide some steer of where the unemployment rate is heading over the next few months supply little evidence that it will dip below 8%. What’s more, we doubt that GDP growth will be strong enough next year to drive the unemployment …
3rd October 2012
The rebound in the ISM manufacturing index in September will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon. But while GDP growth may accelerate a bit, a major improvement is not on the cards. … ISM …
1st October 2012
The promising recovery in the housing market will continue during the fourth quarter and next year. But because housing accounts for only a tiny share of GDP, the recovery won’t transform the US from an economy growing at a fairly subdued rate to one …
28th September 2012
Our econometric model suggests that non-farm payroll employment rose by around 100,000 in September, which would suggest that labour market conditions remain lacklustre. … No signs of faster jobs …
27th September 2012
Don't panic. The massive 13.2% m/m slump in durable goods orders in August was largely due to a drop back in the notoriously volatile commercial aircraft component. In addition, the downward revision to second-quarter GDP growth was mainly due to a bigger …
The Fed's decision to restart its large-scale asset purchases, this time with an open-ended agency MBS programme, is part of what could potentially be a much wider shift in the monetary policy framework. Along with the launch of QE3, changes in the …
26th September 2012
Thanks to the continued rally in equity prices, the Conference Board's measure of consumer confidence shot up to a seven-month high of 70.3 in September, from 61.3 in August. It appears that households are less concerned about either the rise in gasoline …
25th September 2012
QE3 could eventually leave the Fed holding nearly 30% of all mortgage-backed securities, making it a bigger player in the market than either banks or mutual funds. This suggests that, unless economic conditions improve more quickly than either our …
It is encouraging that, faced with the prospect of the US economy hitting the fiscal cliff at the end of the year, businesses have not started to hoard more cash. At the same time, though, there is little evidence that they have started to use their spare …
24th September 2012
Despite the ongoing euro-zone crisis, the looming fiscal cliff and a drop back in the value of their financial assets, US households actually increased their debts in the second quarter by $74bn at an annualised pace. That was only the second quarterly …
The sheer size of the Fed’s QE3 policy becomes even more apparent when it is compared to the policies of other central banks. Although we doubt that QE3 will set the US economy alight, the greater policy stimulus may be one more reason to expect the US to …
20th September 2012
The key message from the host of September manufacturing surveys recently released is that conditions haven’t really deteriorated since last month, but industry is still the weakest part of the economy and the most vulnerable to the global slowdown. … …
The global economic slowdown appears to be having a more marked impact on the US economy, with exports falling sharply in July and manufacturing output dropping in August. The survey evidence now points to a continued decline in real exports. The end-year …
The early evidence suggests that the Fed’s latest policy actions have already started to have their desired effect on financial markets. But there are large question marks over whether these moves will be sustained and whether they will translate into …
18th September 2012
The annual growth rates of the various broad money aggregates have slowed recently, but they will accelerate again as the Fed restarts its quantitative easing, this time purchasing $40bn of mortgage-backed securities per month. … Monetary Indicators …
17th September 2012
The fall in the real median household income to a 16-year low in 2011 means that many Americans are worse off now than they were when President Obama first took office. But the whole economy is undoubtedly in better shape. At the end of 2008, GDP was …
Despite the sharp increase in gasoline prices and the looming fiscal cliff, the University of Michigan measure of consumer confidence rose to a four-month high of 79.2 in September, from 74.3 in August. This news comes in stark contrast to the run of …
14th September 2012
The main message from August’s retail sales and industrial production data is that economic growth remains subdued, and it could yet get weaker. … Retail Sales & Industrial Production …
Consumer prices increased by a sizeable 0.6% m/m in August, largely thanks to a 9.0% m/m rebound in gasoline prices. Nevertheless, even after that big monthly gain, the annual rate of inflation only ticked up to 1.7%, from 1.4%, leaving it still …
The Fed today announced an open-ended QE3 focused on MBS purchases and extended its conditional commitment to leave its policy rate at near-zero through mid-2015. There were numerous other tweaks to its communications strategy, most of which involved …
We think there is a 70% chance that Congress will reach a last minute deal to prevent the $600bn of tax hikes and spending cuts that form the fiscal cliff from kicking in at the start of 2013. But there is a small risk that political brinkmanship could …
12th September 2012
Professor Michael Woodford's recent academic paper presented at the Fed's Jackson Hole conference is still making waves, not surprisingly given his conclusions that quantitative easing doesn't work, that the Fed could do a lot more to improve its …
Today’s announcement by Moody’s that it will probably strip America of its AAA credit rating is not “new news” and shouldn’t cause any major waves in the bond market. The US fiscal position has been on a perilous trajectory for some years and S&P …
11th September 2012
July’s trade figures are nowhere near as good as they look at first sight, as they mask a significant deterioration in export growth to the euro-zone. What’s more, the full impact on the US economy from the overseas slowdown has yet to be felt. … …
The modest rebound in the NFIB small business optimism index to a three-month high of 92.9 in August, from 91.2, is encouraging, but the index is still well below its pre-recession level, suggesting that small businesses remain unusually reticent. … …
The historical experience of the gold standard is that countries often saw periodic declines in their gold stocks, which triggered either a corresponding contraction in money or a hike in interest rates to encourage capital to flow back. Either would then …
10th September 2012
The ISM non-manufacturing survey gets much less attention than its older manufacturing brother even though the non-manufacturing sectors account for a much larger share of GDP. And if these sectors weren’t currently outperforming industry, the economy …
7th September 2012
The modest 96,000 increase in non-farm payrolls in August only increases the probability that the Fed will launch QE3 next week and it won't help President Obama's re-election chances either. … Employment Report (Aug. …
The close relationship between President Obama’s chances of re-election and the level of the S&P 500 appears to suggest that the stock markets favour a Democrat as President. But it is important not to confuse correlation with causation. Obama’s election …
6th September 2012
It now seems highly likely that the Fed will launch a third round of large-scale asset purchases (QE3) at next week's two-day FOMC meeting, which concludes on Thursday 13th September. We expect QE3 to be primarily focused on buying mortgage-backed …
5th September 2012
August’s ISM manufacturing index gives the Fed another green light to launch QE3 next week. Such action is warranted, but it won’t dramatically alter the economic landscape. … ISM Manufacturing Index …
4th September 2012
Fed Chairman Ben Bernanke used his speech at Jackson Hole today to state that unconventional monetary policy does work and that the US needs more of it. It now appears even more likely that at the next FOMC meeting in mid-September the Fed will launch a …
31st August 2012
Although the tax hikes and spending cuts that constitute the fiscal cliff aren’t due to take place until the start of next year, businesses are increasingly stating that the resulting fiscal uncertainty is already hitting sentiment and activity. This is …
Our econometric model suggests that non-farm payroll employment increased by around 100,000 in August, which would be disappointing after July’s 163,000 gain. What’s more, it is possible that in the coming months the uncertainty generated by the fiscal …
30th August 2012
The alternative gross domestic income (GDI) measure of output suggests that the US economy is hardly growing at all. What’s more, there are a couple of reasons why GDI may be a more robust and more reliable measure of output than the more widely used …
29th August 2012
According to the latest data from the FDIC, US banks continued to benefit from shrinking loan losses in the second quarter, which allowed them to maintain a high capital ratio even as they expanded the size of their loan portfolios. … US Banks continue to …
The fall in the Conference Board measure of consumer confidence in August suggests that households are becoming more nervous. Coming after last week’s soft durable goods orders data, this is another sign that the uncertainty generated by the euro-zone …
28th August 2012
The sharp downturn in capital goods orders suggests that the continuing euro-zone crisis and growing uncertainty about the outlook for US fiscal policy are having an increasingly marked impact on business investment. … Businesses becoming increasingly …
27th August 2012
Many Fed officials appear increasingly concerned that the uncertainty surrounding the outlook for fiscal policy is already starting to curb household and business spending. Unless Congress acts, a wide range of tax hikes and spending cuts are scheduled to …
24th August 2012
At first glance the 4.2% m/m surge in July's durable goods orders looks very impressive, but nothing could be further from the truth. This is a very weak report. The slump in core capital goods orders points to a marked weakening in business investment, …
The minutes from the last FOMC meeting at the start of this month strongly suggest that the Fed will launch a third round of quantitative easing at the upcoming meeting in mid-September. While QE3 might be successful in pushing long-term interest rates a …
23rd August 2012
Our baseline forecast for the US economy looks fairly benign, with GDP growth gradually picking up from 1.5% annualised in the second half of this year to 2.0% next year. However, we would stress that the risks to that forecast are very much skewed to the …
22nd August 2012
The annual growth rates of the narrower M1 and M2 monetary aggregates have slowed a little, but our own measure of M3, the broadest aggregate, is still growing at an annual rate of 4.5%. … Monetary Indicators Monitor …
20th August 2012
Since the Fed signalled at the last FOMC meeting three weeks ago that it was poised to act, the incoming economic data have, somewhat ironically, suddenly started to improve. Despite the recent uptick, however, the Fed is still not making any progress …
17th August 2012
The further decline in CPI inflation to a 20-month low of 1.4% in July, from 1.7%, gives the Fed even more flexibility to act next month, if it feels the economy needs a little more stimulus to drive the unemployment rate lower. … Consumer Prices & …
15th August 2012
The sharp 0.8% m/m rebound in retail sales in July was the first increase in four months, but only reversed the declines in the previous two months. So although consumers might have loosened their purse strings somewhat, given that sales are only …
14th August 2012
The near-quadrupling in student loan debt over the past decade to $900bn, or 6% of GDP, is a concern, but we don't believe it represents a serious threat to the US financial system or that it will prevent a recovery in the housing market. … Are student …
13th August 2012
The loss of corn and soybean crops caused by the drought may reduce annual GDP growth by less than 0.1%. The drought is therefore not a disaster for the wider economy. But it doesn’t help when the full impact on US exports from the recession in the …
10th August 2012
The sharp narrowing in the trade deficit in June suggests that the easing in global demand and the strengthening in the dollar have yet to take a major toll on the US economy. But we doubt this can last. … International Trade (Jun. …
9th August 2012
Households may be two-thirds the way through the necessary deleveraging process. What’s more, a larger proportion of the remaining deleveraging will be achieved by incomes growing rather than debt falling. So although the shackles constraining consumption …
