US Economy


The US triple dip panic arrives

Sigh. Here is the Citi economic surprise index courtesy of Sober Look: The Citi Economic Surprise Index continues its relentless slide. The US PMI (52.9 vs. 53.3 expected), the Philadelphia Fed Diffusion Index (-16.6 vs 0 expected), Empire Manufacturing, Industrial Production, etc. are all coming in below expectations. It would seem that economists would adjust their


Why investors hold US Treasuries

Courtesy of Sober Look. Financial advisers continue to profess that US treasuries should be a large part of a balanced portfolio. With the 10-year treasury yielding around 1.6%, the advice is hardly based on return expectations. It is also not due to expectations of mark to market gains. The up-side case in being long the


Will the Fed unleash the boob?

This one is a bit late owing to this morning’s round of media bashing but it’s still important to cover (to say the least). The Fed meets Thursday our time and the question of whether or not more milky wilkies (quantitative easing) will be forthcoming will be important for markets. Let’s take a look. All


US triple dip fears looming

Sadly, as promised, the US recovery is slowing to its formerly anaemic pace. The data last night was uniformly mangy. First, the final GDP print for the first quarter was revised down to a measly 1.9% annualised: Next, the Chicago PMI for May fell sharply from 56.8 to 52.7, to  its lowest point since the


The US can’t drive global growth

By David Llewellyn-Smith Regular readers will know that I track the US’s regional manufacturing indexes. I do this because manufacturing is a key component of the US recovery in a new normal of investment led growth and as such is a good way to gauge the sustainability of  the current cycle. There is good news


It’s the student loans, stupid

Cross posted from the excellent Sober Look: The mainstream media has once again completely missed the reasons behind the US consumer credit growth. CNN/Fortune: – U.S. consumers had long been known for their love of credit until the financial crisis changed everything. Credit cards and loans were suddenly out of favor as credit markets tightened


Uncle Sam powers on

Well, my four punch US data knock down thesis just got KO’d. Last night’s ISM came in hot: Economic activity in the manufacturing sector expanded in April for the 33rd consecutive month, and the overall economy grew for the 35th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The


The US ducks a punch

The US took a clean left jab with the recent Q1 GDP report. Last night’s Personal Consumption Expenditures report (PCE) was better than I expected and was only a glancing right cross to the the temple: Personal income increased $50.3 billion, or 0.4 percent, and disposable personal income (DPI) increased $42.5 billion, or 0.4 percent, in March, according


A four punch knock down for US data?

Last week, in The US recovery is thinning, before the release of Friday’s Q1 GDP I wrote the following: We’re still waiting for the Dallas Fed (which slowed signs of slowing last month) but there are widely consistent themes here: slowing headline numbers, slowing new orders, rising employment numbers, rising input costs and inventories. In


The US recovery is thinning

If the new normal thesis holds then the US recovery meme is now running on empty. That’s not say we’re dipping towards a recession, we’re not, I don’t think. But growth is clearly slowing and the mix is getting less convincing. Consider manufacturing expansion, a key plank in the new normal thesis because it is


FOMC statement

Here is last night’s FOMC statement: Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of


Thus spake The Bernank

Federal Reserve Chairman Ben Bernanke made a speech on Friday (US time) on “Rethinking Finance”, reproduced in full below. The “Wordle” cloud above was published on Zero Hedge where it was pointed out that QE3 – or its more technical term called “milky wilkies” for traders and institutions – was not hinted at…. By the


Fed’s Yellen awful dovish

From Calculated Risk comes the following excerpts from an overnight speech by the Fed Vice Chair Janet Yellen: I see no good reason to doubt that our nation’s high unemployment rate indicates a substantial degree of slack in the labor market. Moreover, while I recognize the significant uncertainty surrounding such forecasts, I anticipate that growth in


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


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:


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


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


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


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


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


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


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


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


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


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


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


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


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


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