US Economics Focus Deflation: Can "it" happen here after all? The collapse in global crude oil prices means that consumer price inflation will fall below zero in January and could remain in negative territory for most of the next 12 months. Nevertheless, the... 8th January 2015 · 1 min read
US Economics Focus Fed's new monetary tools should ensure a smooth rate lift-off When the time comes next year to begin normalising interest rates, we believe that, using the interest on excess reserves (IOER) rate and its new liquidity management tools, the Fed will be able to... 19th November 2014 · 1 min read
US Economics Focus Growing pile of foreign cash won’t help the domestic economy The growing pile of cash held abroad by US firms, which has now reached more than $2trn, or 12% of GDP, is unlikely to provide much of a boost to the economy, not least because the prospects of that... 12th November 2014 · 1 min read
UK Economics Focus How do the US and UK monetary policy outlooks differ? Although we anticipate that the first interest rate hikes in both the US and the UK will come around the same time, towards the end of the first quarter next year, we expect the subsequent pace of... 8th October 2014 · 1 min read
US Economics Focus Dwindling slack will soon lead to surge in wage growth We believe that the slack in the labour market is dwindling and we expect a resulting accelerationin wage growth to be one of the big stories over the next 12 months. Unless productivity growth breaks... 12th August 2014 · 1 min read
US Economics Focus A cyclical rise in wage growth is underway A cyclical rise in wage growth appears to be underway in some sectors of the economy and in some US States. This suggests it is only a matter of time before the decline in the national unemployment... 21st July 2014 · 1 min read
US Economics Focus Core inflation will continue to rise The recent rise in core inflation is not just “noise” as Janet Yellen suggested and instead a large partof it is linked to a decline in the amount of spare capacity in a number of different sectors... 9th July 2014 · 1 min read
US Economics Focus Is the neutral interest rate now lower? The higher post-crisis cost of financial intermediation, increased risk aversion, higher precautionary saving and the decline in the US economy's potential growth rate mean that the neutral real fed... 7th July 2014 · 1 min read
US Economics Focus Stress-testing the US economy against a recession in China Even if China endured a financial crisis and a recession, the hit to the US economy would probably be fairly small. China is just not that important to America’s banks, businesses and investors. We... 5th May 2014 · 1 min read
US Economics Focus Productivity growth held back by structural problems The slowdown in trend productivity growth, which began a decade ago, is principally due to two structural factors; the fading boost from the IT revolution and the aging of the population. The... 22nd April 2014 · 1 min read
US Economics Focus Dwindling spare capacity will provide boost to investment There are finally reasons to expect a more sustained pick-up in business investment this year and next. Admittedly, economists have been forecasting that business investment would become a driving... 3rd April 2014 · 1 min read
US Economics Focus Medical inflation is coming back to life A rebound in medical inflation from recent 40-year lows will add to a wider strengthening in price pressures to push core PCE inflation above the Fed’s 2% target next year. This may prompt the Fed to... 24th March 2014 · 1 min read
US Economics Focus Fed will eventually have to hike rates more rapidly 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... 13th January 2014 · 1 min read
US Economics Focus Drop in participation rate more structural than cyclical The push by the Fed to delay tapering its asset purchases and possibly to lower its unemployment rate threshold suggests that officials expect the participation rate to rebound. We're not convinced... 18th November 2013 · 1 min read
US Economics Focus The rising costs of QE The further rise in the long-term costs of QE means that a smaller improvement in the economic data than before may be needed to prompt the Fed to slow the pace of its asset purchases. At the margin... 13th November 2013 · 1 min read
US Economics Focus Income inequality is not holding the economy back The rise in income inequality may not be morally defensible or socially desirable but, for now at least, it doesn't appear to be restraining economic growth. 11th November 2013 · 1 min read
