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We expect GDP growth of 1.5% for next year, down trivially from about 1.7% this year. Inflation should fall sharply to below 1% by year end, as commodity prices continue to drop back and the unemployment rate remains close to its current level of just …
19th December 2011
We are not convinced by suggestions that, due to either income being under recorded or based on alternative ways of measuring savings, the true household saving rate is much higher than the published figure suggests. Even if for one reason or another the …
Consumer prices were unchanged in November, held down by a drop back in gasoline and motor vehicle prices. The annual rate of CPI inflation fell only marginally to a still elevated 3.4%, from 3.5%, but favourable base effects and the pass-through of the …
16th December 2011
The 0.2% m/m decline in industrial production in November is a bit worse than the 0.1% m/m fall we were expecting, but it looks like the floods in Thailand had more of an impact than we had anticipated. … IP/PPI (Nov), Emp St/Phil Fed (Dec), Cur Ac …
15th December 2011
The Fed put off making changes to its communications strategy and potentially announcing a third round of quantitative easing until the new year. … Fed stands pat for …
13th December 2011
The disappointing increase in retail sales in November suggests that the start of the holiday shopping season was not half as strong as retailers’ spectacular Black Friday sales reports suggested. Nonetheless, real annualised consumption growth in the …
The economy's slow deleveraging continued in the third quarter, with total debt falling to a four-year low of 340% of GDP down from a peak of 373% in the first quarter of 2009. … Slow deleveraging …
12th December 2011
The decline in the trade deficit in October is unlikely to be sustained, not least as US exports can’t continue to grow at current rates when global demand is weakening. … International Trade …
9th December 2011
The announcement last Wednesday, of coordinated action by the Fed, ECB and other central banks to boost global dollar liquidity, will presumably have increased speculation that the Fed could take further action to boost the domestic economy. We doubt that …
6th December 2011
The announcement last Wednesday of coordinated action by the Fed, ECB and other central banks to boost global dollar liquidity certainly had a big impact on financial markets. The announced changes themselves were, in all honesty, fairly modest. …
5th December 2011
The decline in the unemployment rate to a two-and-a-half-year low of 8.6% in November, from 9.0%, is another illustration that the US economy is, for now at least, shrugging off the global economic downturn and fears about the collapse of the euro-zone. …
2nd December 2011
Shrugging off the apparent sharp slowdown in growth in Asia and what looks like a renewed recession in Europe, the ISM manufacturing index rebounded to a five-month high of 52.7 in November, from 50.8. … ISM Manufacturing Index …
1st December 2011
The jump in the Conference Board's measure of consumer confidence to a four-month high of 56.0 in November, from 40.9 in October, is an encouraging sign given the growing concerns in the euro-zone. … Consumer Confidence …
29th November 2011
The mounting fiscal crisis in the euro-zone obviously represents the biggest downside to our forecast that the US economy will continue to expand next year, albeit by a pretty modest 1.5%. In a worst case scenario, the risk is that a disorderly collapse …
28th November 2011
There is an incredible amount of uncertainty surrounding what impact a euro-zone recession and the potential break up of the single currency could have on the US economy and financial markets. The trade links with the peripheral euro-zone countries are …
23rd November 2011
Our employment model suggests that the recent improvement in economic activity is consistent with non-farm payrolls increasing by around 100,000 in November, up from October's 80,000 gain. It is also encouraging that businesses have started to take a …
October's weaker than expected personal spending and durable goods orders data suggest that annualised fourth-quarter GDP growth may be closer to 2.5% rather than the 3.0% that previously looked likely. But even this momentum won't be carried into 2012, …
The apparent failure of the congressional deficit reduction super committee to reach any agreement is not the disaster it is being portrayed as by some commentators. As we argued in our most recent US Economics Weekly, there was never any risk of a …
21st November 2011
The latest incoming data suggest that US economic growth is accelerating, even as growth in Asia slows and Europe falls back into recession. Unfortunately, there are many reasons to fear that GDP growth will slow again next year. The insidious euro-zone …
Even if the super committee fails to recommend ways to reduce the budget deficit by Wednesday's deadline, as there will be no government shutdown, no debt default and no credit rating downgrade, we don't anticipate a big adverse reaction in the markets. …
Headline CPI inflation is now past its peak, falling to 3.5% in October, down from a high of 3.9% in September. It should drop to about 3.0% by the end of this year and plummet to nearer 2.0% by March next year. … Consumer Prices & Industrial Production …
16th November 2011
It is becoming quite clear that the economy has a decent amount of momentum that should help it cope, at least for now, with any adverse effects emanating from Europe. Annualised GDP growth in the fourth-quarter may be even stronger than the third …
15th November 2011
The growth rate of money has levelled out over the past couple of months, with our reconstructed measure of the broad M3 aggregate expanding by about 5% over the past year. … Monetary Indicators Monitor …
14th November 2011
Prime Minister Noda’s announcement on Friday that Japan would join negotiations on the Trans-Pacific Partnership free-trade agreement is a step in the right direction. Not only would the pact open up the economy to imports, it would support a struggling …
The narrowing in the trade deficit in September suggests that annualised third-quarter GDP growth may be revised up from 2.5% to perhaps 2.8%. But a slowdown in overseas activity means the external sector won't support GDP growth for long. … International …
10th November 2011
The Fed's Senior Loan Officer survey shows that in the three months to October banks took steps to protect themselves from the European debt crisis. Nevertheless, the survey is still consistent with a modest expansion in actual domestic bank lending. … US …
7th November 2011
The Fed appears increasingly more determined to help the ailing housing market. Another round of asset purchases focusing on mortgage-backed securities, perhaps in the first half of next year, would complement the recent widening of the HARP refinancing …
October's Employment Report has pluses and minuses but, on balance, it is positive. Non-farm payrolls increased by a modest 80,000 last month, down from a revised 158,000 gain in September. … Employment Report …
4th November 2011
The Fed opted to stay on the sidelines today. Most probably because FOMC members want more time to judge how effective the Operation Twist programme announced at the last meeting in September has been, but also because the improved tone of the incoming …
2nd November 2011
There was little in October's ISM manufacturing survey to suggest that the US economy has moved any closer towards another recession. But equally, there were no real signs that economic growth is strengthening. The upshot is that the economy will continue …
1st November 2011
The acceleration in third-quarter GDP growth to 2.5% annualised, from 1.3%, seemed to make a mockery of fears that emerged early in the quarter that the economy was entering a recession. Nevertheless, we still expect growth to slow again over the next …
31st October 2011
Our econometric model, which is based on a wide range of indicators, suggests that non-farm payroll employment rose by around 75,000 in October. That would be broadly similar to the increases seen in the previous two months, but it may not be enough to …
28th October 2011
The acceleration in third-quarter GDP growth to 2.5% annualised, from 1.3%, would seem to make a mockery of fears that emerged early in the quarter that the economy was entering a recession. Nevertheless, we still expect growth to slow again over the next …
Only five weeks after the Fed announced its plan to extend the average maturity of its Treasury holdings and to reinvest principal payments from maturing mortgage-backed securities (MBS) holdings back into newly issued MBS, speculation is growing that …
27th October 2011
September's durable goods report is broadly consistent with our estimate that third-quarter GDP growth accelerated to 3.2% annualised, in part due to a sharp pick up in business investment (data due for release tomorrow). … Durable Goods Orders …
The Federal Reserve's framework for setting and communicating monetary policy came under the spotlight last week. It is understandable given the persistently high level of unemployment that economists are looking for ways to make monetary policy more …
25th October 2011
Our latest calculations suggest that GDP growth accelerated to 3.2% annualised in the third quarter, more than double the rate in the second. The rebound in spending on motor vehicles as the Japanese-related supply disruptions faded explains some of the …
21st October 2011
The modest 0.1% m/m increase in core consumer prices in September, which was more precisely only a 0.054% gain, should ease fears among the hawks at the Fed that underlying inflation is spiraling out of control. … Consumer Prices …
20th October 2011
The rapid pace of money growth continued in September. To some extent the recent pick up reflects a jump in the precautionary demand for money, however, so it is not necessarily inflationary. … Monetary Indicators Monitor …
19th October 2011
Despite signs of a slowdown in global economic growth and the fragile state of business confidence, manufacturing output is still expanding at a solid pace. … Industrial Production …
18th October 2011
Recent events in Washington suggest that, with fiscal policy largely tapped-out and monetary policy ineffective, trade protection policies are becoming more appealing. Import tariffs are not the first-choice policy, but they are one avenue that …
The decent 1.1% m/m rise in retail sales in September shows that households are not completely down and out. Real consumption in the third quarter probably rose at an annualised rate of close to 2%. That's hardly setting the world alight, but it is better …
15th October 2011
The widening in the bilateral trade deficit with China to a record high in August is only going to make the trade protection bill passed by the Senate this week more popular. With fiscal and monetary policy increasingly impotent, trade policies, such as …
14th October 2011
Our baseline view is still that the US economy will avoid a recession, albeit only narrowly. Furthermore, if there is a recession, we suspect it would be a fairly modest one because the most cyclical parts of the economy have barely recovered from the …
11th October 2011
There is no hint in September's Employment Report that another recession is starting. Nevertheless, the 103,000 increase in non-farm payrolls last month is still consistent with what would normally be considered very weak economic growth. … Employment …
8th October 2011
The modest rebound in the ISM manufacturing index to 51.6 in September, from 50.6, demonstrates that the economy hasn't fallen off a cliff (at least not yet). But, at that level, the index is nevertheless consistent with fairly muted GDP growth of less …
4th October 2011
One reason why wage growth may have not fallen much below 2% could be that the structural unemployment rate has risen by more than most estimates suggest. The extent of skills and location mismatching means there is something in this. Even so, with the …
Our econometric model, which is based on a wide range of labour market indicators, suggests that for the second consecutive month the US economy as a whole failed to create any jobs in September. The main problem is that businesses do not have enough …
30th September 2011
August's durable goods orders data suggest that firms did not pull the plug on their investment spending in the wake of the turmoil in the financial markets. This supports our view that annualised GDP growth in the third quarter could be as good as 2.5%. …
29th September 2011
The Conference Board measure of consumer confidence, which was pretty much unchanged in September, shows that households are just as downbeat as they were last month. With equity prices hardly off their recent lows, the jobs outlook deteriorating and …
28th September 2011
