US Economy

1

The US is slowing

So, as forecast, the US mini-cycle is slowing. It’s not disastrous. And we need more data for confirmation, but I’m satisfied that a slowing is underway. The ISM manufacturing has held so far but is well below last year’s highs: But the regional indexes are also showing early signs of rolling over which I expect

31

QE gone

Following is a must watch video interview with the Fed’s Jeffrey Lacker from Bloomberg on why QE is gone. I don’t buy it. Do we really expect the Fed to give up low mortgage rates and a low dollar without a fight? Nonetheless, markets are taking the opportunity to pull back from risk.  Enjoy:

9

Milky wilkies turns sour

Find below the FOMC March minutes. I’ve highlighted the bit that freaked markets out: a 2% inflation threshold for QE3. That won’t be easy with oil where it is. Developments in Financial Markets and the Federal Reserve’s Balance Sheet The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign

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Can the US consumer keep spending?

Regular readers will know that my take on the US economy in the new normal is pretty straight forward. It is that without high debt and asset price growth, the US consumer must rely on income growth or reduced savings to grow his/her personal outlays. With consumption roughly 70% of the economy, that means slower

1

US manufacturing has slowed

Regular readers will know that I follow the regional Fed manufacturing surveys in the US for two reasons. The first is that after the GFC, which prompted the need for the US to rebalance to external demand, the PMIs are a key guide to whether any expansion is sustainable. Second, I predicted a run of

44

The world hangs on US housing

Who’d a thunk it? With China slowing substantially and Europe setting course for perpetual recession, the global economy’s fate this year hangs on the US economy and more particularly, a US housing recovery. Equity markets seem to believe in such an outcome. Respected local strategists like Shane Oliver are on board. Here’s an excerpt from

7

Is US debt growing at unsustainable rate?

Cross posted from Colin Twigg’s blog with permission: We often blame Fed monetary policy for the GFC, with interest rates at exceptionally low levels leading to “Greenspan’s bubble.” Treasury was just as culpable, however, with the massive 2004-2005 surge in public debt flooding the market with liquidity. The repeat in 2008-2011 was more justifiable: the spike

3

Bernanke discusses Europe

Find below Chairman Ben Bernanke of the US Federal Reserve on his latest testimony to the US Congress, focusing on Europe: Developments in Europe and Their Effects on the U.S. Economy For almost two years, developments in Europe have had an important influence on the tenor of global financial markets and on the global economy

42

The financial culture exposed

You may heard about, from the twittersphere/blogosophere or many hours later, the MSM, the fiery resignation of a top Goldman Sachs executive last night in the US. His take on the change in the corporate culture at what has been infamously called “the vampire squid” is eye-opening to the lay, non financial reader, but no

21

The Fed sits again

The US Federal Reserve’s Open Market Committee or FOMC for short, sat last night, in the equivalent of the RBA’s monthly meeting to decide the cash rate. The committee agreed that inflation was only a temporary issue due to high oil prices, and made no noises on QE3, deciding to continue its “Operation Twist” and

17

Oil and the US economy

Cross posted from Econbrowser, James Hamilton on why the current oil price won’t derail the US economy. Here’s why I believe that the current high price of oil is not enough to derail the U.S. economic recovery. Although the prices of oil and gasoline have risen significantly from their values in October, they are still

1

Dynamics of US slowdown

So, my thesis of a US mini-cycle culminating in slowing growth is firming up. Last night we had a raft of important data that showed the current bounce is on thin ice. First up was the ISM manufacturing index slowed 2.1 points to 52.4 in February in defiance of regional indexes: The slowing is visible

9

QEase offers up gold

Find below Fed Chairman Ben Benanke’s semiannual Humphrey-Hawkins testimony to Congress. The two new points that I can discern, are an increased focus on the inflationary effects of the current spike in oil, which is seen as temporary, and the highlighting of recent good employment numbers, though ongoing concern is obvious. The Fed remains concerned

13

US manufacturing still growing

Regular readers will know that I follow the regional Fed manufacturing surveys in the US for two reasons. The first is that after the GFC, which prompted the need for the US to rebalance to external demand, the PMIs are a key guide to whether any expansion is sustainable. Second, I predicted a run of

9

US deleveraging continues

Last night the NY Fed released its quarterly update on US household credit trends. This is an excellent document that boils down complex credit aggregates to more easy to understand charts. The headline numbers showed continued deleveraging: Aggregate consumer debt fell slightly in the fourth quarter. As of December 31, 2011, total consumer indebtedness was

0

Fed Minutes

Find below the full Fed Minutes released last night. Staff Review of the Economic Situation The information reviewed at the January 24-25 meeting indicated that U.S. economic activity continued to expand moderately, while global growth appeared to be slowing. Overall conditions in the labor market improved further, although the unemployment rate remained elevated. Consumer price

44

A key driver of a US recovery

It’s not all that often that I read a piece of research from the banks that impresses me. One exception is Westpac’s Huw MacKay and his periodical, Phat Dragon. More broadly, as I’ve said before, Westpac’s institutional research is the best, with the bold Bill Evans leading the pack on interest rates. But I’m tempted

14

US party is premature

Last week I wrote a post about a stumbling US economy: In mid November I wrote a piece called Can the US consumer carry us all. It was following the release of good October retail sales growth and argued the following: This demand appears to have caught producers off guard, or, they have been managing inventories

6

US economy stumbles

In mid November I wrote a piece called Can the US consumer carry us all. It was following the release of good October retail sales growth and argued the following: This demand appears to have caught producers off guard, or, they have been managing inventories rather well. The September wholesale inventory number last week was low and

2

Chart of the Day: Moderating GDP

To start the week off, today’s chart comes from Scotty Barber at Reuters, and shows the volatility in US GDP growth (gross domestic product), with two historical periods clearly marked. The Great Moderation from the mid 1980’s to the GFC was well-named but transitory (a fact lost on most market economists who pine for the

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The eagle stirs

Please find below former Reserve Bank of New Zealand advisor and multiple CEO, Terry “Macca” McFadgen’s, latest ‘Maccanomics’ article, which tackles the reviving United States economy. Enjoy! On June 20, 1782, the bald eagle was chosen as the emblem of the United States of America. Six years earlier at the Second Continental Congress thirteen colonies

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US gas debate vital to Oz

The US economy has shown some signs of stabilisation over the past few months.  For example, retail spending appears to be revisiting a growth path.  According to some commentators, the US economic green shoots appear robust and healthy, while I remain cautious about projecting anything more than muddling though, with a drawn-out grinding improvement in

3

US economy & QE3

The institutional bank at NAB does some good research but they have a habit of interpreting data with an overly bullish eye. That is one one reason why I prefer the output at Westpac. Still, every so often they produce a report worth your time and today is one of those days with a neat

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PIMCO says QE3 won’t work

PIMCO, the world’s largest bond fund, has made much ado about the US Fed’s Quantitative Easing (QE) programs in the past, but in this Bloomberg interview with CEO and co-CIO Mohamed El-Erian, their stance seems to have changed to that of observers who realise, past the risk-on rallies that they embibe, QE actually doesn’t do

3

Chart of the Day: US deleveraging

Today’s chart comes from Calculated Risk and calculates the Mortgage Equity Withdrawal (MEW), as a percentage of disposable income. This is derived from the Fed Flow of Funds Data, as explained: This is an aggregate number, and is a combination of homeowners extracting equity (hence the name “MEW”, but there is little MEW right now!),

1

Full FOMC Statement

Last night the Fed left things pretty much unchanged which, for some unknown reason, upset equities. What did they want, a party trick? Here’s the full statement: Release Date: December 13, 2011 For immediate release Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding

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Chart of the Day: US deflation held back

Today’s chart comes from Econompic and tracks how in the United States, public sector spending has offset private sector deleveraging in Q3 of 2011: There are two takeaways here. First, whilst the US private sector is outright deleveraging, this has only just begun and it still at hugely elevated levels (except college students who are

9

Chart of the Day: US male unemployment

Today’s chart comes from Colin Twigg’s blog, and graphs the US male unemployment rate from 1975 to now: Given that the headline total unemployment rate fell to 8.6%, this chart gives a more realistic view of both the structural and cyclical rate, and to minimise demographic factors, as Colin says: There is a visible improvement,

15

Can the US economy decouple?

Last night’s Wall St trade took heart from a big jump in the Conference Board consumer confidence figures. It is great that the US has weathered its QE2 withdrawal and deficit ceiling debacle, but we should bear in mind that the index only rose to July levels, which are still very suppressed: Despite this,  yesterday the