US Economy


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


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


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


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


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


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


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


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


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


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!),


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


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


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,


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


Fitch puts US on negative watch

You really have to laugh, in a black kind of way, at the role of the ratings agencies today. It’s not that I blame them now. They are doing their jobs again. But the failure to do so previously makes them look like playthings of the milieu now. Anyways, Fitch just put the US on


A picture of deleveraging

Overnight, the New York Fed released its quarterly report into US credit trends. To cut a long story short, US consumers continue to deleverage. The research has some killer charts, including the one above, which shows that after all of the fear and loathing of the past three years, aggregate credit has slid back only


When supercommittees fail

Check out this great chart from Abnormal Returns this morning: It says all sorts of wonderful things, including that it’s much more difficult to make successful bearish forecasts than it is a successful bullish ones.  But the point I wish to make this morning is about the big bounce in positive economic surprises since August


Can the US consumer carry us all?

The US consumer is back, defying the odds and me. Last night we had October retail sales and results were good. From Calculated Risk: On a monthly basis, retail sales were up 0.5% from September to October (seasonally adjusted, after revisions), and sales were up 7.9% from October 2010. From the Census Bureau report: The U.S.


Fed slashes projections

For those living under a rock, last night was the Fed meeting for October and the results are below. First, the Statement: Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed


Chart of the Day: US earnings revision

A great chart from Dr Ed Yardeni’s blog on the US S&P500 earnings bonanza (note that the US reports quarterly, Australian corporates half yearly). The chart is a weekly update of analyst’s average forecast of quarterly earnings. Note the substantial upward revisions to Q1 thru Q3, with an estimated looking through growth rate of some


Hope from the US?

Last night’s market action may have been worrisome for China (with metals crushed) and frustrating for Europe (going nowhere fast) but US data was excellent. The Philly Fed Index, a guide to manufacturing in the north east, and the same Philly Fed that collapsed in August, rebounded at a record pace, blowing away all market


FOMC statement

Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow. Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles


US recession data marches on

Last night’s US data was not reassuring. The two North Eastern Fed manufacturing indices both missed market expectations. The Empire State Index fell further, prices rose and employment dropped, a nasty combination: The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened for a fourth consecutive month in September. The general business conditions index