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January's Employment Report was unequivocally strong and points to a rapidly improving labour market. Non-farm payrolls increased by 243,000, a nine-month high, up from 203,000 in December. That was well above the consensus forecast at 140,000. As a …
3rd February 2012
The continued steady turnaround in the industrial sector, as suggested by the rise in the ISM manufacturing index to 54.1 in January, from 53.1, appears to be due to both the resilience of the domestic and global economies. We’re not convinced, however, …
1st February 2012
The decline in the Conference Board measure of consumer confidence in January to 61.1, from 64.8 in December, doesn't sit well with the overall improvement in the economic data. Consumers remain a riddle wrapped inside an enigma. … Consumer Confidence …
31st January 2012
The Fed's latest Senior Loan Officer survey revealed that the ongoing crisis in the euro-zone is beginning to have a more marked impact on domestic credit, with foreign-owned banks tightening lending standards on loans to American businesses. … Euro …
30th January 2012
With the downturn in the housing market drawing to a close, housing should soon start to boost economic growth. But as housing now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2 percentage points to annual GDP …
The Fed's new interest rate projections ended up having only a modest impact on market expectations last week. Indeed, the impact was smaller than we might have expected based on the pledge in the accompanying statement alone. In the end the Fed didn't …
The acceleration in GDP growth to 2.8% annualised in the fourth quarter, from 1.8% in the third, suggests that the recovery is gathering momentum. However, the much bigger than expected positive contribution from inventories in the fourth quarter leaves …
27th January 2012
After incorporating the “known knowns”, our econometric model suggests that payrolls rose by around 150,000 in January, which would be less than December’s 200,000 gain. The “known unknowns” of the payroll benchmark revisions and updated population …
26th January 2012
December's durable goods orders figures are encouraging, suggesting that after stagnating in the fourth quarter of last year, business investment started to pick up again right at the end of that quarter. The latter is a good sign as far as the first …
The publication today of the first set of interest rate projections by the FOMC heralded a historic change in the way that the Fed conducts monetary policy, but had little practical impact on market rate expectations. … Fed's anticipates that rates are …
25th January 2012
It appears that GDP growth accelerated to around 2.4% annualised in the fourth quarter, up from 1.8% in the third. But we suspect that, despite the apparent strength in some of the incoming data, it will slow again in the first quarter of this year. The …
24th January 2012
Recent signs that manufacturing activity is going from strength to strength have prompted some hopes that industry will save the economy from another year of pretty weak growth. The problem is that the recent revival of industry may be due to some …
23rd January 2012
Consumer prices were unchanged in December and the annual CPI inflation rate declined to 3.0%, from 3.4%. Favourable base effects will generate an even sharper drop in that annual inflation rate over the next few months, to less than 2% by the spring and …
19th January 2012
The Fed has already announced that it will be making some major changes to its monetary policy framework at the two-day FOMC meeting that concludes next Wednesday (25th January). Those changes will include starting to publish forecasts for short-term …
18th January 2012
The strong rebound in manufacturing output at the end of last year is encouraging, as is the further decline in producer price inflation. … Industrial Production & Producer Prices …
While the growth rate of the narrower M1 money aggregate has started to slow a little, M2 growth has remained broadly unchanged and the growth rate of our reconstructed measure of the broadest M3 measure has even picked up slightly. … Monetary …
17th January 2012
The recent run of stronger economic data has led to speculation that the US economy could be poised for a good 2012 after all. This is a remarkable turnaround from August last year when speculation began to mount that the US economy was sliding into …
16th January 2012
The widening in the trade deficit in November to a 10-month high is perhaps the first real sign that the crisis in Europe and the more general global slowdown is starting to take its toll on the US. … International Trade …
13th January 2012
December’s disappointing retail sales figures suggest it was not a happy holiday season for retailers. For the fourth quarter as a whole, our calculations now suggest that real consumption increased by a more modest 2.0% annualised, less than our previous …
12th January 2012
In addition to forecasting interest rates for the first time, by the end of this month the Fed may have adopted numerical targets for both inflation and the unemployment rate and perhaps even launched QE3. None of this, however, will prevent another …
9th January 2012
The bigger than expected 200,000 increase in non-farm payrolls in December (consensus forecast was 155,000) alongside the decline in the unemployment rate to a near three-year low of 8.5%, from 8.7%, certainly suggest that labour market conditions are …
6th January 2012
UK gilt yields have continued to fall over the last month, despite growing fiscal fears and the limited boost to gilt prices provided so far by the Monetary Policy Committee’s further round of asset purchases. The cost of insuring against UK sovereign …
3rd January 2012
Our econometric model suggests that the labour market ended 2011 on a high note, with non-farm payrolls rising by around 150,000 in December. That would be a marked turnaround from the stagnation in jobs growth seen last summer and would beat November’s …
Just how US banks cope with the euro-zone crisis, which we believe will involve the departure of at least one nation from the currency union next year, could make or break the US economy in 2012. … What to watch in …
27th December 2011
November's personal spending and durable goods data releases were a little disappointing and together suggest that fourth-quarter GDP growth will now come in at slightly below 2.5% annualised, whereas previously we were hoping for something between 2.5% …
23rd December 2011
We expect the rapid run up in CPI inflation this year to be completely reversed next year, although the core inflation rate will fall more modestly. … Inflation set to fall sharply in …
21st December 2011
The growth rate of all the monetary aggregates has remained steady recently, with our reconstructed measure of the broad M3 aggregate expanding by about 5% over the past year. … Monetary Indicators …
20th December 2011
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
