U.S. Economic News

U.S. Economic News

August 16, 2019

U.S. Economic Indicators

Privately-owned housing starts dropped 4.0% in July to a seasonally adjusted annual rate of 1.19 million (up 0.6% year-over-year). Housing permits surged 8.4% to a 1.34 million annual pace in July and are up 1.5% from last year. Census Bureau Report
 
The University of Michigan Consumer Sentiment Index fell 6.3 points to 92.1 in the preliminary August reading and is down 4.1 points from August of last year.
The Index of Consumer Expectations dropped 8.2 points to 82.3 while the Current Economic Conditions Index eased 3.3 points to 107.4. University of Michigan

U.S. News

Heather Long of the Washington Post writes that nine major countries — including several key U.S. trading partners — are in a recession or on the verge of one, stoking fears that the U.S. economy may be dragged into contraction as well. Long points out that most of these at-risk countries have export-dependent economies that have suffered due to escalating trade tensions between the U.S. and China. WaPo

The Wall Street Journal reports that despite the partial scaling-back of the newest round of tariffs on Chinese goods, consumers likely will still face higher prices for goods such as apparel, electronics, and sporting goods. Analysis shows that the partial de-escalation of the new tariffs will still result in higher tariffs on more than half of all consumer goods imported from China starting September 1st and higher tariffs on virtually all Chinese goods starting December 15th. WSJ

U.S. Economic News

U.S. Economic News

August 14, 2019

U.S. News

Greg Ip reports for the Wall Street Journal that the recent spate of nationalist and populist backlash against globalization in countries such as the U.S. and Britain is pushing the global economy towards recession. The rise of unilateralism has weighed heavily on global confidence as businesses and investors, uncertain what rules will govern international commerce, retreat from risky investments. WSJ

According to the Wall Street Journal, Beijing considers the delay in new U.S. tariffs on Chinese goods as an important step towards a trade truce, increasing the likelihood that China will send negotiators to continue trade talks in September. China may also resume purchases of U.S. agricultural products ahead of the next round of talks, a boon for struggling American farmers. WSJ

The Financial Times reports that the spread between the 10-year and 2-year U.S. Treasurys has turned negative for the first time since the lead-up to the 2008-09 recession, an ominous signal often perceived by investors as a sign of impending recession. A similar inversion in the U.K. underscores the extent to which U.S.-China trade tensions and weakening Chinese and German industrial output are weighing on the world economy. FT

U.S. Economic News

U.S. Economic News

August 13, 2019

U.S. Economic Indicators

The NFIB Small Business Optimism Index rose 1.4 points to 104.7 in July as seven components improved, two weakened, and one was unchanged. Capital spending plans and employment expectations improved, while plans to increase inventories were unchanged and expectations for credit conditions eased. NFIB Report

Consumer prices rose 0.3% in July (up 1.8% from a year ago). The “core” CPI, which excludes food and energy, increased 0.3% in July and is up 2.2% from last year. BLS Report

U.S. News

The Wall Street Journal reports that the U.S. has announced it will delay imposing new 10% tariffs on certain Chinese products — including cellphones, laptops, and toys — until December 15, and will remove other goods from the tariff list entirely. The delay softens the impact on U.S. retailers dependent on imports from China and gives negotiators additional time to strike a deal before the new levies go into effect. WSJ

U.S. Economic News

U.S. Economic News

August 12, 2019

U.S. News

According to the Wall Street Journal, Federal Reserve officials are debating whether now is the time to implement a countercyclical capital buffer, a policy tool that allows the Fed to require banks to increase holdings of loss-absorbing capital. Fed officials in favor of the move argue that raising bank capital requirements now will provide a much-needed layer of additional resilience, while others argue that banks’ capital reserves are already sufficiently high. WSJ

Bloomberg News reports that Chinese policymakers are maintaining a cautious approach to monetary policy as they attempt to manage China’s growth slowdown, leaving options open for larger stimulus efforts in case the trade conflict with the U.S. morphs into an all-out currency war. Even with domestic monetary policy unchanged, allowing the yuan to remain weak against the dollar could absorb most of the impact of the latest U.S. tariff increase. Bloomberg

U.S. Economic News

U.S. Economic News

August 9, 2019

U.S. Economic Indicators

The headline Producer Price Index (“PPI”) for final demand rose 0.2% in July and was up 1.7% from July of last year. The core — which removes volatile prices of food, energy, and trade services — fell 0.1% in July and was up 1.7% from a year ago. BLS Report

U.S. News

According to the Wall Street Journal, the International Energy Agency recently downgraded its forecast for global oil demand growth for the third time in four months, citing worsening relations between the U.S. and China that could lead to further reductions in trade activity. Global demand for oil between January and May 2019 was at its weakest since 2008, while oil production by non-OPEC countries — including the U.S. — continues to surge. WSJ

The Financial Times reports that the rise of internet shopping and deep discount chains will make it difficult for U.S. retailers affected by the U.S.-China trade war to pass price increases to consumers. Retailers are instead trying to mitigate price increases and protect profit margins by renegotiating contracts with suppliers. FT