U.S. Economic News

U.S. Economic News

August 5, 2016

U.S. Economic Indicators

The U.S. economy added 255,000 jobs in July, well above consensus, and payrolls figures for both May and June were revised up by a combined 18,000 jobs.  The unemployment rate held steady at 4.9%, average hourly earnings increased by 8 cents (up 2.6% Y/Y), and the labor force participation rate edged up to 62.8%.  BLS Report, WSJ

The U.S. trade deficit rose to -$44.5 billion in June after posting a revised -$41.0 billion in May.  Exports increased $0.6 billion and imports rose $4.2 billion; the goods and services deficit increased.  BEA Report

U.S. Economic News

The Financial Times reports that the portion of the U.S. workforce employed in young companies has been shrinking, and the pace at which new employer-owned businesses are created has slowed.  Moreover, only twenty counties in the U.S. accounted for half of net new businesses from 2010 – 2014. The authors cite these trends as evidence that there is less fluidity in the U.S. economy.  FT

The U.S. Chamber of Commerce has sued to block the implementation of new rules that make it more difficult for firms to move overseas in search of better tax rates.  The rules, which have already broken up planned mergers of prominent firms, aim to prevent earnings stripping and future corporate inversions.  WaPo

U.S. Economic News

U.S. Economic News

August 4, 2016

U.S. Economic Indicators

New factory orders for manufactured goods fell 1.5% in June, the second consecutive monthly decline, and are down 2.6% on the year. Orders excluding transportation and orders for nondefense capital goods excluding aircraft both rose 0.4%.  Census Bureau Report

Jobless claims increased 3,000 to 269,000 last week.  The four-week moving average rose 3,750 to 260,250.  DOL Report

U.S. Economic News

Early retirements deny companies important workplace knowledge and experience, lowering overall U.S. productivity, says a new report by researchers at Harvard University and the Rand Corporation.  The authors find that on average, every 10% increase in the share of a state’s population over 60 reduces per capita growth in GDP by 5.5%. While an aging population can restrict growth as the workforce shrinks, this new effect has gone largely unnoticed by economists.  WSJ

The Washington Post’s Charles Lane argues that it is a good sign that the U.S. homeownership rate is at an all-time low since the Census Bureau began tracking the metric in 1965.  Due to recovering real estate prices, homeowners have approximately the same equity in their homes today as they did when homeownership was at an all-time high in 2004.  This means there is more equity on a per-household basis, providing a more secure tenure of ownership.  WaPo

U.S. Economic News

U.S. Economic News

August 3, 2016

U.S. Economic Indicators

The ISM Non-Manufacturing Index fell 1.0 percentage point to 55.5 in July,reflecting sector growth for the 78th consecutive month at a slightly slower rate.  The employment index fell 1.3 percentage points to 51.4, while the new orders index rose 0.4 percentage point to 60.3.  ISM Report

The ADP National Employment report indicated that nonfarm private-sector employment increased by 179,000 in July — up from a revised 176,000 in June.  The gains came entirely from the service sector, which added 185,000 positions; goods producing employment dropped by 6,000 jobs.  ADP Employment

U.S. Economic News

Low-skilled workers will be the driving force behind 2.49% annual economic growth from now until 2024, according to Harvard economist Dale Jorgenson.  Jorgenson believes the average quality of workers will flat-line but the number of hours worked will return to pre-recession highs, though the threat of the higher education sector becoming saturated could prove a headwind to growth.  WSJ

The U.S. Treasury has proposed new regulations aimed at eliminating estate tax loopholes.  Critics of the estate tax argue that it unfairly punishes farmers and small business owners, while supporters argue that the wealthy need to pay their fair share. Regardless of the outcome, tax attorneys still believe that estate planners will be able to work around the new rules.  WaPo

U.S. Economic News

U.S. Economic News

August 2, 2016

U.S. Economic Indicators

Real disposable personal income increased 0.1% in June after no change in May, and real personal consumption expenditures (PCE) rose 0.3% in June, compared with a 0.2% increase in May.  Meanwhile, the PCE price index ticked up 0.1% in June (up 0.9% Y/Y), and the core price index also edged up 0.1% (up 1.6% Y/Y).  BEA Report

U.S. Economic News

According to Dallas Fed President Robert Kaplan, a number of global risks could pose a threat to the U.S. economy and therefore necessitate close monitoring.  Citing slow growth, high levels of overcapacity, and high levels of debt-to-GDP in other major economies, Kaplan defended his position that the Fed should tighten monetary policy gradually and patiently.  Reuters

Despite the expanding labor market, 16% of the 43 million Americans with student debt are in long-term default, owing a combined $125 billion.  Taxpayers may be on the hook for this amount, given that many continue to have trouble finding jobs or refuse to answer government demands for payment due to what they see as an unfair system.  WSJ

U.S. Economic News

U.S. Economic News

August 1, 2016

U.S. Economic Indicators

The ISM Manufacturing Index decreased 0.6 percentage point to 52.6 in July, but remains above the 50.0 threshold indicating sector expansion for the fifth consecutive month.  The New Orders and Employment indexes declined 0.1 and 1.0 percentage point to 56.9 and 49.4, respectively; meanwhile, the Production Index rose 0.7 percentage point to 55.4. ISM Report

U.S. Economic News

Seven years after the end of the recession, average annual growth remains the lowest of any expansion period since 1949.  Economic growth has averaged 2.1% since mid-2009, and there have only been three longer U.S. expansions in past seven decades.  WSJ

Over two-thirds of economists surveyed by the Financial Times believe that the current presidential campaign will be a headwind to growth.  Despite record-low borrowing costs, firms are reducing spending in the face of much uncertainty regarding the outcome of the election, especially with regard to trade policies and infrastructure spending.  FT

The central bank has little power to improve productivity in the U.S., according to New York Fed President William Dudley.  Dudley believes that the executive and legislative branches should enact reforms that boost output and make the economy more efficient, which will in turn drive faster growth.  Reuters

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