Signals implying the slow demise of the decade-long economic recovery include the rising number of claims for unemployment insurance benefits. While we do not believe there is imminent risk of an explosion in demand for first-time benefits, once the pace of firings rises above 250,000 it likely marks an important turning point late in the business cycle. … READ MORE >
Economics
RSM Brexit Stress Index higher as global uncertainty hits home
The RSM Brexit Stress Index rose in a week that included the European Union’s rejection of Prime Minister Boris Johnson’s withdrawal proposal and the equity market’s recognition of the adverse effects of disruptions to trade. … READ MORE >
September jobs report: Mixed hiring data with stagnant wages
The U.S. economy is slowing and job creation continues to ease along with overall economic activity. Given the recent readings of the manufacturing sector, which is in recession, and a service sector that has slowed noticeably, forward-looking investors, firm managers and policymakers should anticipate a march down toward 100,000 jobs per month by the end of the year, which is necessary to stabilize the unemployment rate. … READ MORE >
Hiring expected to slow in September jobs report
The labor market is expected to continue to lose steam in September, with the total change in employment likely increasing by 115,000 jobs on the month, and the unemployment rate likely rising to 3.8%. Given the slowdown in domestic manufacturing activity and goods production, we note there is downside risk to our top line forecast when the report is released on Friday. … READ MORE >
US manufacturing activity hits 10-year low point
Contraction in U.S. manufacturing is continuing, with activity reaching a ten-year low in September, as economic and political uncertainty weigh on the industrial sector. … READ MORE >
Brexit stress gets reprieve due to Supreme Court ruling
The RSM Brexit Stress Index eased slightly during the week, as Britain’s Supreme Court ordered the resumption of Parliament and restored some sort of order to the Brexit chaos.
The composite index, which measures financial-market stress surrounding Britain’s impending departure from the European Union, closed the week at 1.20 standard deviations above normal levels of stress, down from last week’s close at 1.27. While stress remains high, it has retreated from the extreme levels of earlier this month when a constitutional crisis and a clumsy exit appeared inevitable. … READ MORE >
Economic growth is running out of steam, RSM data shows
So far the domestic economy has absorbed two policy-induced shocks—a trade war with China and the slowing of immigration—and one exogenous oil supply shock that are all contributing to the story of slower growth. Once the economy slows to near 1% next year, recession risks will become elevated. … READ MORE >
RSM manufacturing outlook signals additional decline
The RSM US Manufacturing Outlook Index continues to anticipate a decline in manufacturing, falling in September to -0.84 standard deviations below normal conditions for the manufacturing sector from -0.55 standard deviations in August. It the latest signal that manufacturing is contracting. … READ MORE >
Brexit stress rises amid Bank of England’s caution
The RSM Brexit Stress Index rose slightly during a week that included conciliatory tones regarding proposals for a Northern Ireland economic zone, the High Court’s hearings over the suspension of Parliament and the Bank of England warning that continuing anxiety over Brexit and global trade disputes are taking their toll on the economy. … READ MORE >
FOMC policy decision: ‘Catch-22’ in a monetary context
Demands by market actors for accommodative policy linked to a diminished global and domestic economic outlook resulted in a reduction in the federal funds rate by 25 basis points to a range between 1.75% and 2%. In our estimation, this is likely not the final rate cut of 2019 by a central bank clearly concerned with the direction of trade policy, a modest exogenous supply shock in oil markets and political pressure from the executive branch to reduce rates. … READ MORE >