The Real Economy Blog

Joe Brusuelas

RSM Brexit Stress Index eases amid progress over Northern Ireland

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The RSM Brexit Stress Index moved substantially lower after talks between British Prime Minister Boris Johnson and Ireland’s Prime Minister Leo Varadkar were reported to offer options for the transition of Northern Ireland from the common market into Britain’s single market. Though details were still to be worked out, the positive developments allowed ... READ MORE >

Start watching initial jobless claims as economy slows

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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 ... READ MORE >

RSM Brexit Stress Index higher as global uncertainty hits home

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The RSM Brexit Stress Index jumped in a week that included the European Union’s stark criticism of Prime Minister Boris Johnson’s withdrawal proposal and the equity markets' recognition of the adverse effects of disruptions to trade. The composite index, which measures financial-market stress surrounding Britain’s impending departure from the European ... READ MORE >

Brexit stress gets reprieve due to Supreme Court ruling

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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 ... READ MORE >

Economic growth is running out of steam, RSM data shows

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The U.S. economy likely grew at a 2.0% yearly rate in July and August, a drop from the 2.3% yearly rate of U.S. real GDP growth in the first quarter, according to the RSM US Real GDP Index (see chart below). (The index is based on a subset of indicators used by the National Bureau of Economic Research.) So far the domestic economy has absorbed two ... READ MORE >

Brexit stress rises amid Bank of England’s caution

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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's warning that continuing anxiety over Brexit and global trade disputes are taking their toll on the economy. The composite ... READ MORE >

FOMC policy decision: ‘Catch-22’ in a monetary context

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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 ... READ MORE >

Modest supply shock to global oil to boost US retail gas prices

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The attack on the Saudi oil production facility at Abqaiq over the weekend will temporarily remove roughly 5.7 million barrels of oil production per day, or about 5% of the total global supply. The price of global benchmark Brent Crude rose 14.25% on Monday, while West Texas Intermediate was up 14.38%. Saudi oil accounts for approximately 12% of global ... READ MORE >

Fed preview: Difficulty and divided FOMC

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Monetary policy is difficult under the best of circumstances. The cross currents of the trade war, a modest exogenous supply shock in oil markets, political pressure from the executive branch to reduce interest rates and former colleagues suggesting the Federal Reserve get political make the rate decision resulting from the upcoming FOMC meeting one of the ... READ MORE >