U.S. Economic News

U.S. Economic News

August 12, 2016

U.S. Economic Indicators

The headline Producer Price Index (PPI) for final demand decreased 0.4% in July.  The core — which removes volatility in prices of food, energy, and trade services — remained unchanged in July but is up 0.8% on the year.  BLS Report

Retail sales were virtually flat in July but are up 2.3% from year-ago levels.  Core sales — which excludes autos, gasoline, building materials, and food services — also held steady after a 0.5% increase in June.  Census Bureau Report, Reuters

The University of Michigan Consumer Sentiment Index inched up 0.4 point to 90.4 in August but is down 1.5 points on the year.  The index for consumer expectations rose 2.5 points, while the index for current economic conditions fell 2.9 points.  Report

U.S. Economic News

A Wall Street Journal survey of economists found that 57% of respondents believe the current election cycle is harming economic activity, largely due to increased uncertainty.  Previous surveys this year have not seen levels above 50%; however, views have started to shift now that business investment has declined for three consecutive quarters.  WSJ

U.S. Economic News

U.S. Economic News

August 11, 2016

U.S. Economic Indicators

Jobless claims decreased 1,000 to 266,000 last week.  The four-week moving average increased 3,000 to 262,750.  DOL Report

U.S. Economic News

Home prices rose in 83% of major U.S. real estate markets in the second quarter, resulting from a deficient supply of affordable homes as opposed to surging demandThe rate of new home construction remains at levels associated with recessions and the homeownership rate is at a 50-year low — evidence that damaged credit, tough credit requirements, and student debt continue to shut millions of aspiring homeowners out of the market.  WSJ

The Financial Times discusses the extent to which Brexit, consumer spending, oil prices, and wage pressures are all impacting U.S. corporate profits, which have fallen for the past five consecutive quarters.  While Brexit and oil prices generate uncertainty for future earnings for major corporations, upward wage pressures and robust consumer spending could increase inflation and drive higher earnings.  FT

U.S. Economic News

U.S. Economic News

August 10, 2016

U.S. Economic News

The Job Openings and Labor Turnover Survey (“JOLTS”), a closely watched measure of labor market health, indicated there were 5.6 million job openings at the end of June, up marginally from May.  Hires remained largely unchanged at 5.1 million and the quits rate was 2.0%, both consistent with levels over the past year.  BLS Report

Ben Bernanke argues that when predicting rate hikes, markets should pay more attention to incoming economic data on key parameters of the economy than guidance from Fed policymakers.  In a Brookings Institution blog post, Bernanke points out that although market commentary on FOMC decisions typically focuses on short-run economic factors, downward revisions to longer-term factors like the terminal funds rate and natural unemployment rate are pushing the FOMC in a dovish direction.  Brookings

According to the New York Fed, credit cards are returning among individuals with low credit or subprime credit scores.  Among people with credit scores between 620 and 660, for example, the share that has a credit card rose from 54.3% in 2013 to 58.8% in 2015. Even though credit has become more widely available, delinquency rates continue to improve — suggesting that American consumers are not overextended.  WSJ

U.S. Economic News

U.S. Economic News

August 9, 2016

U.S. Economic Indicators

The NFIB Small Business Optimism Index edged up 0.1 point to 94.6 in July after a modest increase in June.  Four of the ten components experienced gains, four fell, and two remained unchanged.  The index remains well below its forty-two year average of 98, reflecting continued market uncertainty and weak expectations for business conditions and future business investments.  NFIB Report

Nonfarm business sector labor productivity for Q2 decreased at a seasonally adjusted annual rate of 0.5% (down 0.4% Y/Y).  This is the third quarterly decline in a row — the longest stretch of falling productivity since the end of the 1970s.  Hours worked increased 1.8% in Q2 and unit labor costs increased 2.0%.  BLS Report

U.S. Economic News

According to Greg Ip of the Wall Street Journal, a tighter job market is favoring workers in their wage negotiations, and shifting the economic pendulum away from capital and back to labor. Ip observes that while employee income as a share of net national income (less rental costs) has nearly returned to its pre-recession average of about 67%, corporate profits as a share of net national income have been falling.  WSJ

Paul Krugman argues in the New York Times that the U.S. government should be pursuing higher levels of deficit spending.  Krugman argues that the ultra-low interest rate environment makes it an ideal time for the government to borrow and that increasing public investment — particularly on infrastructure — will result in future economic growth and job creation. NYT

U.S. Economic News

U.S. Economic News

August 8, 2016

U.S. Economic News

U.S. median wages have grown at a healthy clip of 3.6% over the past year, according to data gathered by the Atlanta Fed.  Despite improvements in both personal and household income, recent polls on consumer sentiment indicate that consumers are more worried about the economy as a whole than their personal economic situation.   WSJ

According to Jerome Powell, a member of the Federal Reserve Board of Governors, there is increased risk of the U.S. economy becoming trapped in a period of low growth requiring even lower long-term interest rates than expected.  Powell advises that because inflation is below target, the Federal Reserve should be patient in raising rates, especially with global uncertainty weighing on the economy.  FT

Britain’s departure from the EU will hardly affect North America, according to a new poll of over seven hundred economic experts.  Germany’s Ifo Institute published the results, saying that EU member countries will be hit the hardest, while Russia and the Middle East will be largely unaffected as well.  Reuters

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