An “uncertainty tax” linked to the economic realities of Brexit developments in the U.K. and trade tensions in the United States is damping overall economic activity in both economies. These issues, which are strongly linked to the breakout of economic populism around the world, are creating conditions for slower growth and recession if the current protectionist actions are sustained. … READ MORE >
FOMC preview: Prudent pause and revising economic outlook downward
The dovish turn at the Federal Open Market Committee’s January meeting was predicated on an interesting juxtaposition: the committee telegraphed a prudent pause in its policy normalization campaign, while not substantially revising down its forward-looking economic outlook. … READ MORE >
Miles to go before I sleep: Brexit moves toward extend and pretend
The U.K. Parliament this week has moved toward our base case for the Brexit process, approaching a short-term extension that will result in a modified deal for Britain to exit the European Union some time before June 30. But getting there won’t be easy. … READ MORE >
Retail sales: Fatigued consumer bounces back but will there be follow through?
January retail sales data indicated a modest rebound in spending after a weaker-than-expected close to 2018. The 0.2 percent month-over-month increase in retail sales and the 0.9 percent increase in the retail sales control group figure that feeds into estimates of gross domestic product both affirm that the U.S. did not fall into recession to kick off the year. … READ MORE >
February employment overview: uncertainty tax to damp hiring going forward
The U.S. economy has slowed over the past three months and hiring eased along with it. The economy generated only 20,000 jobs in February and the unemployment rate declined to 3.8 percent due to a combination of special one-time factors, a government shutdown and the likely pulling back of hiring by companies facing heightened uncertainty about the direction of the domestic and global economies amid sustained international trade tensions. … READ MORE >
‘Extend and pretend’–a Brexit snapshot
The British government appears to be on a course moving toward a deal to exit the European Union following critical votes on March 12. Our base case is what we would call the “extend and pretend” scenario: the government will likely ask for an extension of Article 50 until mid-to-late June of this year from a scheduled departure of March 29. … READ MORE >
The U.S. trade deficit– behind the numbers
The 2018 total trade deficit exploded to $621 billion, up 12.5 percent as imports increased 2.1 percent and exports declined by 1.9 percent. The deficit in goods merchandise soared to 891.2 billion, the highest on record in the history of the economy. … READ MORE >
Q4’18 GDP shows solid above-trend growth
The U.S. economy grew at a 2.6 percent growth rate during the final three months of 2018 on the back of a 2.8 percent increase in personal consumption bolstered by a blowout 5.9 percent rise in purchases of durables and an unsustainable buildup in inventories, in addition to a 13.1 … … READ MORE >
Powell’s Humphrey-Hawkins testimony doesn’t deviate from Jan. statement
Federal Reserve Chairman Jerome Powell reaffirmed his policy outlook for the United States on Tuesday, which implies a slower pace of growth linked to increasing headwinds related to policy and global economic issues. … READ MORE >
Is the economy headed for recession?
A confluence of factors is conspiring to lay the groundwork for conditions increasingly threatening an end to the current business cycle. … READ MORE >