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The economy's recent performance looks better if we measure it using aggregated incomes rather than expenditures. Gross domestic income increased by 2.7% annualised in the first quarter, easily outpacing the 1.9% increase in gross domestic product. Those …
4th June 2012
The modest decline in the ISM manufacturing index, to 53.5 in May from 54.8 the month before, was probably a lot better than most people had fearedafter the weak payrolls data and the sharp declines in the manufacturing PMIs for Europe and China. … ISM …
1st June 2012
May's employment report clearly suggests that labour market conditions are deteriorating again, which will undoubtedly prompt more speculation that QE3is coming soon. Non-farm payrolls increased by only 69,000 in May (less than half the consensus …
The fall in the Conference Board measure of consumer confidence to a four-month low of 64.9 in May, from 68.7 in April, suggests that the sharp drop back in stock markets was the dominant factor taking a toll on the mood of consumers. … Consumer …
29th May 2012
We are still assuming that Congress will agree to extend the bulk of the tax cuts due to expire at the end of the year and to postpone most of the automatic spending cuts set to take place early next year. Even though Congress is deeply divided, it is …
28th May 2012
Markit’s new US manufacturing PMI appears to be better at capturing changes in GDP growth and manufacturing output than the ISM survey. That said, the very limited history means the real test is whether it proves to be a more reliable and more robust …
24th May 2012
The annual growth rate of our re-constructed measure of M3 eased slightly to 5.2% y/y in April, from 5.9% but, with M1 and M2 still growing at much faster rates, we see no cause for alarm. … Monetary Indicators Monitor …
Our econometric model suggests that May is the month when payrolls growth snapped back in line with the underlying trend. We estimate that non-farm payroll employment increased by 175,000 in May, up from 115,000 in April. … Payrolls to rise back to …
While the 0.2% m/m increase in durable goods orders in April was in line with the consensus forecast, we would still label this a mildly disappointing report, since that gain was largely driven by an inexplicable rise in commercial aircraft bookings. …
So far there is little evidence that the recent softening in economic growth is developing into a more significant slowdown. The leading index and a weighted average of the two ISM activity indices are both consistent with annualised GDP growth of close …
23rd May 2012
Labour's share of income has been on a downward structural trend since the 1980s, resulting from the decline in labour's bargaining power, globalisation and technological progress. Not only will that downward trend continue, but it could even intensify as …
21st May 2012
All things considered, we don't expect Greece's eventual exit from the euro-zone to have any devastating impact on the US economy, even if the exit from the single currency is compounded by a Greek banking collapse and/or a further sovereign debt default. …
The US recovery looks to be on firmer ground, despite the mounting crisis in the euro-zone. We anticipate GDP growth of 2.0% this year and 2.5% in 2013. … Recovery looks to be on firmer …
17th May 2012
A look back at history throws cold water over suggestions that the Fed tends to alter its behaviour ahead of Presidential elections. Nonetheless, with political hostility towards the Fed currently high and the possibility that the Fed may want to keep its …
15th May 2012
Falling energy prices and favourable base effectspushed the annual CPI inflation rate down to a 12-month low of 2.3% in April, from 2.7%. Headline CPI inflation will fall below 2.0% over the next few months, possibly even to 1.5%, but core inflation …
At least some of the recent easing in economic growth is due to the surge in gasoline prices earlier in the year. The most recent fall in gasoline prices should therefore prevent a more sustained or severe slowdown in growth and could even prompt a small …
14th May 2012
The sharp rise in imports in March is unlikely to be a sign that domestic demand has strengthened markedly. Nonetheless, imports are still likely to grow at a faster pace than exports this year, resulting in net trade acting as a small drag on GDP growth. …
10th May 2012
There are still fears of another sharp summer slowdown in economic growth, particularly after another disappointing gain in payrolls in April, but we think that the recovery will hold up better this year. The Fed's latest Senior Loan Officer Survey showed …
7th May 2012
The very modest 115,000 increase in non-farm payrolls in April will raise fears that the recovery is fading fast, just like it did at this time last year. We still think the true health of the labour market lies somewhere in the middle of the strength …
4th May 2012
The rebound in the ISM manufacturing index in April will ease concerns that the softer tone of the recent incoming economic data marked the start of another midyear slump in growth. … ISM Manu. Index (Apr.) & Const'n Spending …
1st May 2012
The upward revisions to the Fed’s forecasts for core inflation published after last week’s policy meeting have largely been overlooked. But they actually play a crucial role in explaining why the chances of QE3 have become even slimmer than they already …
30th April 2012
First-quarter GDP growth came in at a disappointing 2.2% annualised, but the undershoot compared with the 2.5% consensus forecast was largely explained by an unexpected second consecutive quarterly slump in defence spending, which subtracted 0.4% from …
27th April 2012
We don’t think that the 120,000 increase in nonfarm payroll employment in March, which was half February’s rise, is the start of a sustained period of substantially weaker jobs growth. Our econometric model suggests that payroll employment rose by around …
26th April 2012
The statement issued today after the two-day FOMC meeting indicates that the majority of Fed officials are content to wait and see how the US recovery develops. In particular, the statement reaffirmed the FOMC's conditional commitment to leave the fed …
25th April 2012
The unexpectedly big 4.2% m/m slump in durable goods orders in March isn't quite as bad as it looks, particularly as the details of the report suggest that there is now some upside risk to our estimate that first-quarter GDP increased by 2.5% annualised. …
The trivial fall in the Conference Board's measure of consumer confidence to 69.2 in April, from 69.5 March, was broadly in line with the already reported modest decline in the University of Michigan measure. Both surveys, however, failed to capture the …
24th April 2012
The modest 120,000 increase in non-farm payroll employment in March, half the pace of job creation in February, prompted fears that the recovery could be faltering again. The rise in weekly initial jobless claims has only added to those fears. Some of the …
23rd April 2012
The likely acceleration in consumption growth in the first quarter is encouraging, especially at a time when the recovery in the industrial sector appears to be running out of steam. But while we do not expect a repeat of last year, when spending growth …
We doubt that the FOMC's upcoming two-day meeting, which concludes on Wednesday 25th April, will throw up any major changes. The minutes from the last meeting revealed little appetite among Fed officials for a new round of asset purchases. The weaker than …
18th April 2012
The soft industrial production and housing starts figures for March add to the evidence that economic growth may have eased towards the end of the first quarter. … Industrial Production …
17th April 2012
Households appear to be contributing more to the economic recovery just at a time when the industrial recovery seems to be running out of stream. Some of the strength in consumption in the first quarter, however, may not continue into the second. … …
16th April 2012
The annual growth rates of the broad monetary aggregates slowed only marginally in March, with the growth rate of our measure of M3 easing from 6.1% to a still very healthy 5.8% last month. … Monetary Indicators Monitor …
The rebound in tax receipts means that, for the first time in three years, State and local governments might soon be in a position to boost their spending. Over the next couple of years, this may offset at least part of the expected Federal fiscal …
Despite the 0.3% m/m increase in consumer prices in March, favourable base effects still pushed the annual rate of CPI inflation down to a 12-month low of 2.7%, from 2.9%. The rate should fall to about 2.0% by year-end, putting it in line with the Fed's …
13th April 2012
In response to the unexpected narrowing in the trade deficit in February, we have raised our estimate for first-quarter GDP growth to 2.5% annualised, from 2.0%. Meanwhile, we doubt that that the spike in the number of initial jobless claims last week is …
12th April 2012
The US economy still appears to be headed in the right direction. We admit that economic growth isn't going to be spectacular this year, probably around 2.0%. Nevertheless, there would appear to be little prospect of the US following the euro-zone back …
9th April 2012
The disappointingly modest 120,000 increase in non-farm payrolls in March, which was exactly half the 240,000 gain month before, mainly reflects some payback from the unseasonably warm winter. Between December and February, payrolls increased by an …
6th April 2012
If other firms follow Apple's lead in paying an annual dividend then, given the amount of stockpiled cash that the corporate sector is currently hoarding, the resulting boost to personal income and consumption could be significant. Even if firms only paid …
4th April 2012
The rise in the ISM manufacturing index in March leaves it consistent with annualised GDP growth of around 2.5%, which is in line with our estimate for the first quarter. … ISM Manufact'ng (Mar.) & Const'n Spending …
2nd April 2012
Even a larger and longer-lasting rise in 10-year Treasury yields than the one seen in recent weeks is unlikely to derail the economic recovery. Just as tight credit conditions meant that the previous falls in borrowing costs did not stimulate demand by …
Our econometric model, which takes into account a wide range of indicators, suggests that payroll employment rose by around 200,000 in March. That would be the fourth monthly increase of 200,000 or more in a row. It seems unlikely, however, that the …
29th March 2012
The 2.2% m/m increase in February's durable goods orders was well below the 3.0% consensus forecast and our own even higher 5.5% forecast, principally because of an inexplicably small 6.0% rebound in commercial aircraft orders. … Durable Goods Orders …
28th March 2012
The slight fall in the Conference Board's measure of consumer confidence to 70.2 in March, from a 12-month high of 71.6, only reversed a small portion of the gain in February. We are not too worried about the level, as the sub-indices are still pointing …
27th March 2012
Households are currently being subjected to a number of diverse and often opposing economic forces, but most will cancel each other out and we still anticipate consumption growth of just above 2% this year. … Do rising equity prices offset higher gas …
26th March 2012
There are reasons to believe that over the next two years the US will perform better than the other major economies. This would build on the trend of the last four years that has seen a disappointing US recovery manage to outperform the recoveries in most …
22nd March 2012
The annual growth rates of all the monetary aggregates remained strong in February, with our measure of the broadest M3 aggregate increasing by 6.0% over the past year. With the euro-zone crisis easing, at least temporarily, and the Fed's latest stress …
21st March 2012
The recent rise in gasoline prices won’t prevent inflation from falling, but it will limit just how far and fast it drops. What’s more, evidence of a strengthening in underlying price pressures suggests that the fall in core CPI inflation will also be …
20th March 2012
The widening in the current account deficit to more than 3% of GDP at the end of last year is no big concern. The US has been running deficits of more than 3% of GDP for most of the past dozen years and yet its net external liabilities are still only a …
19th March 2012
Higher gasoline prices will limit the decline in CPI inflation over the next few months, while the growth rate of manufacturing output is likely to slow to a more sustainable pace. … Consumer Prices & Industrial Production …
16th March 2012
The statement released after today's FOMC meeting included a slightly more upbeat assessment of the economic outlook, but the Fed can hardly be accused of acting as a cheerleader for the recovery. Nevertheless, we suspect that the improvement evident in …
13th March 2012
