U.S. Economic News

U.S. Economic News

August 1, 2019

U.S. Economic Indicators

The ISM Manufacturing Index edged down 0.5 percentage point to 51.2 in July. The Employment Index fell 2.8 percentage points to 51.7, while the New Orders Index rose 0.8 percentage point to 50.8. ISM Report

Construction spending declined 1.3% in June to an annualized rate of $1.29 trillion. Private construction fell 0.4% while public construction decreased 3.7%. Census Bureau Report

Initial jobless claims rose 8,000 to 215,000 last week. The four-week moving average fell 1,750 to 211,500. DOL Report

U.S. News

According to the Wall Street Journal, U.S. corporate tax cuts enacted in 2017 have reduced the tax advantages of reincorporating abroad — a move known as corporate inversion — to the point where many companies are reestablishing U.S. addresses. Although foreign addresses still confer a slight tax advantage, it is no longer enough to outweigh the reputational and political costs of inversion. WSJ

The New York Times reports that the anticipated increase in housing demand due to the sharp decline in mortgage rates since 2018 has been largely outweighed by the effect of rising home prices. The muted response of the housing market to a decline in mortgage rates, one of the key ways Fed rate cuts are transmitted to the broader economy, suggests the Fed may have a much harder time fighting the next economic slowdown. NYT

U.S. Economic News

U.S. Economic News

July 31, 2019

U.S. Economic Indicators

The ADP Employment Report shows that private-sector employment increased by 156,000 jobs in July, in line with expectations of 155,000. The services sector added 146,000 jobs, while the goods-producing sector added 9,000 jobs. ADP Report

U.S. News

According to the Wall Street Journal, the lack of significant progress in trade negotiations between the U.S. and China is partly the result of Beijing’s strategy of patiently waiting for better terms rather than hurrying into a deal. China’s willingness to agree to key U.S. demands will depend largely on the success of Beijing’s attempts to stimulate the domestic economy and prevent China’s slowdown from worsening. WSJ

Paul Hannon reports for the Wall Street Journal that weak second-quarter E.U. growth is a fresh indication of faltering momentum in the global economy, as the manufacturing sector grapples with persistent trade tensions and faltering global demand. The U.S. Federal Reserve is one of a number of central banks around the world easing or considering easing monetary policy in response to economic weakness abroad. WSJ

U.S. Economic News

U.S. Economic News

July 30, 2019

U.S. Economic Indicators

Real disposable personal income rose 0.3% in June after rising 0.2% (revised) in May, while real personal consumption expenditure (PCE) rose 0.2%. The PCE price index rose 0.1% (up 1.4% Y/Y) and the core price index rose 0.2% (up 1.6% Y/Y). BEA Report

The Conference Board’s Consumer Confidence Index rose from 124.3 (revised) in June to 135.7 in July. Consumer Confidence rebounded to its highest level this year amid renewed consumer optimism surrounding current and future business and labor market conditions. Conference Board Report

The National Association of Realtors pending home sales index rose 2.8% in June (up 1.6% Y/Y).  NAR reports that the second consecutive monthly increase in contract signings is the start of a positive trend driven by a strong job market, rising home values, and low mortgage rates. NAR Report

U.S. News

Greg Ip of the Wall Street Journal reports that a likely reduction in the European Central Bank’s already-negative policy rate adds pressure on the Federal Reserve to lower interest rates to prevent U.S. rates from diverging too much from foreign interest rates. Central banks keep domestic rates in line with foreign rates in order to avoid depreciating their domestic currency, and this practice results in lower interest rates and stronger demand in each country. WSJ

U.S. Economic News

U.S. Economic News

July 29, 2019

U.S. News

The Washington Post reports that the Federal Reserve is almost certain to cut interest rates this week despite historically low unemployment. Many economists are concerned that interest rates are already too low for a cut to have much of an impact, while others believe that cutting sooner rather than later is the only way to prolong the current expansion. WaPo

Josh Zumbrun and Chao Deng report for the Wall Street Journal that trade talks between the U.S. and China are set to continue in Shanghai this week and are expected to address a number of smaller issues rather than the major points that led to the breakdown of negotiations in May. Areas in which the two countries are likely to make progress include China committing to increase purchases of U.S. agricultural products and the U.S. agreeing to relax the ban on U.S. companies selling to Huawei. WSJ

U.S. Economic News

U.S. Economic News

July 26, 2019

U.S. Economic Indicators

The advance estimate of Q2 GDP indicates that the U.S. economy expanded at an annualized rate of 2.1%, down from 3.1% in the first quarter. The reading reflects positive contributions from consumer and government spending, offset by negative contributions from private inventories, exports, and nonresidential & residential investment. BEA Report

U.S. News

The Wall Street Journal reports that state and local pensions have less than 73% of the assets needed to fund future obligations to public workers, according to a recent survey. A potential side-effect of such a shortfall is increased risk-taking by funds to fulfill their obligations to beneficiaries. WSJ

Tom Fairless reports for the Wall Street Journal that the European Central Bank has signaled it is preparing to reduce short-term rates and restart a bond-buying program as it seeks to insulate the eurozone from headwinds such as trade tensions and Brexit. The ECB’s willingness to ease monetary policy puts pressure on the Fed to follow suit and cut rates in July for the first time in over a decade. WSJ