Those who are making the case that U.S. industrial production has bottomed may want to rethink that overly optimistic statement. While auto production will undoubtedly rebound in November, the problems at Boeing surrounding the 737 Max and the uncertainty tax imposed on firms caused by the trade conflict with China have knocked the air out of domestic ... READ MORE >
Economics
The middle market economy—often overlooked in the wake of large public companies and emerging Wall Street darlings—is the backbone of U.S. economic growth, accounting for the majority of new U.S. jobs and some 40 percent of the nation’s GDP.
RSM Brexit Stress Index eases on speculation of trade deal
Stress in the British financial markets eased during the week, as domestic political events took a back seat to global market pressure. The RSM Brexit Stress Index, which measures financial and economic risk surrounding Britain’s impending departure from the European Union, closed the week lower, at 0.67 standard deviations above normal levels of implied ... READ MORE >
The Fed walked a tightrope in cutting rates, and succeeded
In July, the Fed did what markets had been pushing for when it cut the federal funds rate by a quarter percentage point. But rather than calm the markets, the Fed only added to the concern when it did not send a clear message that there were more cuts to come. Advocates for more rate cuts maintained that the Fed was not giving enough credence to ... READ MORE >
RSM Brexit Stress Index ends tumultuous week slightly higher
Stress in the financial markets pushed a bit higher during a tumultuous week that included the European Union granting an extension of the Brexit deadline to Jan. 31 and Parliament granting Prime Minister Boris Johnson’s wish for a December general election. The RSM Brexit Stress Index, which measures stress surrounding Britain’s impending departure from ... READ MORE >
ISM Manufacturing Index continues to contract
The October ISM Manufacturing Index continued to contract in October, though it improved to 48.3 from September's reading of 47.8, implying a modestly slower pace of contraction in domestic manufacturing sentiment. The forward-looking new orders index improved to 49.1 from 47.3. Both are in line with our RSM Manufacturing Outlook Index, which stands at ... READ MORE >
October US employment report: solid trend in hiring continues
The GM strike distorted the October U.S. employment report, resulting in a net gain of 128,000 in total jobs. Investors will hang an asterisk on the October report--42,000 jobs linked to the strike and a 17,000 job decline in census workers. But once the damage caused by the strike is excluded, it appears the economy generated close to 187,000 new jobs, ... READ MORE >
Fed cuts interest rate, but does not commit to more
The Federal Reserve reduced its targeted federal funds rate by a quarter point to a range between 1.5 and 1.75 percent at its October meeting Wednesday. In its policy statement, the committee removed the phrase “act as appropriate,” possibly opening the door to taking a wait-and-see approach to additional rate cuts. The change to the policy statement notes ... READ MORE >
Q3’19 GDP: Consumer keeps economy from drifting toward stall speed
Overall economic activity in the third quarter continued to decelerate with the top-line estimate indicating a 1.9% increase in growth and a 2% gain on a year-ago basis. Real final sales clocked in at a 2% increase as did final sales to domestic purchasers and gross domestic purchases. Digging through the depths of the government’s report, it appears that ... READ MORE >
RSM US Manufacturing Outlook Index remains negative
The RSM US Manufacturing Outlook Index continues to anticipate a slowdown in production, remaining negative in October at -0.59 standard deviations below normal conditions for the manufacturing sector. This is a slight improvement from its September value of -0.79 standard deviations. The MOI is a composite index based on surveys of manufacturing ... READ MORE >
The jobs report comes out Friday. Put a big asterisk on it because of the GM strike.
The 40-day strike at General Motors may have been resolved, but its broader impact on the economy will become evident when key data on the U.S. labor market is released on Friday. We expect the U.S. employment report to show a net increase of 75,000 in total employment, well below the three-month average of 157,000, with the risk of a much slower change ... READ MORE >