U.S. Economic News

U.S. Economic News

September 6, 2016

U.S. Economic Indicators

The ISM Non-Manufacturing Index fell 4.1 percentage points to 51.4 in August, reflecting continued sector growth, albeit at a slower rate.  The employment index fell 0.7 percentage point to 50.7 and the new orders index dropped 8.9 percentage points to 51.4.  ISM Report

U.S. Economic News

Sam Fleming asserts in the Financial Times that the sustained drop in U.S. productivity will be a defining characteristic of the next president’s economic inheritance.  Fleming argues that infrastructure spending, corporate tax cuts, immigration reform, and reductions in regulation can all help productivity recover.  FT

A new paper by professors of finance at Carnegie Mellon University and the Wisconsin School of Business argues that corporate inversions can actually be quite costly to certain groups of shareholders who have to pay capital gains taxes on their shares.  The authors find that taxable shareholders lose 1-3% of their shares’ value, while other groups of shareholders like executives, foreign shareholders, and retirement account investors avoid the tax when a company inverts.  NYTimes

U.S. Economic News

U.S. Economic News

September 1, 2016

U.S. Economic Indicators

After expanding five consecutive months, the ISM Manufacturing Index fell 3.2 percentage points to 49.4 in August — the largest decline since January 2014.  The employment index fell 1.1 percentage points to 48.3 and the new orders index fell 7.8 percentage points to 49.1.  ISM Report

Jobless claims increased 2,000 to 263,000 last week.  The four-week moving average declined 1,000 to 263,000.  DOL Report

Nonfarm business sector labor productivity for Q2 decreased at a revised, seasonally adjusted annual rate of 0.6% after declining at a similar pace in Q1.  This is the third quarterly decline in a row, the first time that has happened since 1979.  In year-over-year terms, productivity was down by 0.4.  Hours worked increased 1.7% and unit labor costs increased 4.3% in the second quarter.  BLS Report, WSJ

U.S. Economic News

According to Colombia Business School economist Geoffrey Heal, President Obama’s pledge to reduce greenhouse gas emissions by 80% from 2005 levels by 2050 could cost over $5 trillion.  Heal argues that because the program to reduce GHG emissions is not a line item in the federal budget, the financial costs would be picked up by utilities companies, and then ultimately passed down to consumers. Heal believes that these costs are achievable and manageable, only if the government establishes “very strong” financial incentives, such as a carbon tax.  WSJ

U.S. Economic News

U.S. Economic News

August 31, 2016

U.S. Economic Indicators

The ADP Employment Report shows that private-sector employment increased by 177,000 jobs from July to August.  The gain was entirely attributable to the services sector, which added 183,000 jobs, while the goods sector lost 6,000 jobs.  ADP Report

The Pending Home Sales Index reached its second-highest level in over a decade in July, increasing 1.3% to 111.3 (up 1.4% Y/Y). The rise reflects strong activity in the West; the region’s index reached its highest point in over three years.  NAR Report

U.S. Economic News

The Wall Street Journal reports that the U.S. is on track to experience the longest period of falling food prices in half a century.  An excess of dairy, meats, and grains has been driving the deflationary trend, which is eliminating farmers’ profit margins and forcing them to slash spending.  WSJ

Chicago Fed President Charles Evans says he is increasingly convinced that U.S. economic growth has slowed permanently, which will keep interest rates low for a long time.  Embracing Larry Summers’ secular stagnation theory, Evans argues that lagging productivity growth and an aging population give little reason to expect higher interest rates in the near term.  Reuters

U.S. Economic News

U.S. Economic News

August 30, 2016

U.S. Economic Indicators

The Conference Board’s Consumer Confidence Index increased in August to its highest level in nearly a year, as the Present Situation Index rose from 118.8 to 123.0 and the Expectations Index rose 4.4 points to 86.4.  Short-term expectations regarding business and employment conditions improved considerably from July, suggesting the possibility of a moderate pick-up in growth in the coming months.  Conference Board Report

U.S. Economic News

According to the Wall Street Journal, U.S. companies are struggling to find workers who have strong “soft skills” such as communication, initiative, and problem solving.  Of the 900 executives surveyed by WSJ last year, 92% said soft skills were equally or more important than technical skills — a finding that is increasingly relevant as the U.S. labor market tightens.  WSJ
 
A research firm founded by two former Census Bureau employees estimates that real median household income in the U.S. grew nearly 3.8% in 2015, the single largest annual gain since 2000. 
The authors say that persistently low inflation stemming from falling energy prices has driven the rise in real income over the last full calendar year.  NYT

U.S. Economic News

U.S. Economic News

August 29, 2016

U.S. Economic Indicators

Real disposable personal income increased 0.4% in July after a 0.2% rise in June, and real personal consumption expenditures (PCE) rose 0.3% in July, down from a 0.4% increase in June.  Meanwhile, the PCE price index was flat in July (up 0.8% Y/Y), and the core price index edged up 0.1% (up 1.6% Y/Y).  BEA Report

U.S. Economic News

The Wall Street Journal reports that Federal Reserve officials do not believe negative interest rates are necessary in the U.S. due to improvements in the job market and economic conditions.  Chairwoman Janet Yellen did not even mention negative interest rates in a recent speech, and Atlanta Fed President Dennis Lockhart is treating negative interest rates in other countries as “experiments” to observe from a distance.  WSJ

Cleveland Fed president Loretta Mester believes that the current case for an increase in short-term interest rates is compelling.  Mester notes that the U.S. economy has been resilient in the face of a number of shocks, though the Fed should still monitor risks from slow growth in China and the U.K.’s departure from the EU.  FT
 
According to a new report, enrollment in the insurance exchanges established by the Affordable Care Act is at less than half of CBO’s initial forecast.  
While some major insurance companies have departed from various state exchanges due to absent profitability, the share of uninsured Americans reached an all-time low of 9.1% last year. WaPo

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