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United States: sharp fall in consumption in Q1, improvement soft so far in Q2

First-quarter consumption was revised sharply down, and monthly data for May were on the soft side of expectations. However, similar to GDP data, it appears that consumer spending data suffered some distortions of late. We nevertheless remain optimistic on consumption and overall GDP growth in Q2 and H2.   Q1 growth in healthcare spending revised from […]

United States: recent pick-up in inflation is more than statistical “noise”

Inflation has picked up somewhat over the past 2-3 months. Janet Yellen described the move as “noise”. However, the uptick is widespread and with labour market slack diminishing rapidly, inflation is likely to gradually inch higher, a scenario that seems far from being completely priced in by financial markets. Core PCE inflation moved up to […]

United States: the housing market bounces back noticeably

We are optimistic that things will continue to improve progressively in the housing market. Modest rebound in existing home sales Yesterday’s data on existing home sales confirmed that following a weather-induced slump in Q1, sales rebounded in April and May. Last month, sales reached an annualised pace of 4.89 million units, 6.5% higher than in […]

United States: household net worth significantly up in the first quarter

With house prices and equities climbing further last quarter, it wasn’t a surprise that the Fed last week published estimates of household asset values that were once again up significantly q-o-q in Q1 2014. Total assets rose by 1.7% ($1,509bn) to 92,426bn between end-2013 and end-March 2014. Slightly more than half of the quarterly increase […]

United States: Job creation robust once again in May

Today’s employment figures gave further credence to the scenario that following a weather-related weak first quarter, economic growth will bounce back markedly in Q2. Non-farm payroll employment rose by a solid 217,000 m-o-m in May, in line with consensus expectations. April’s figure was revised marginally down (from +288,000 to +282,000) and the number for March […]

United States: the credit cycle remains supportive of economic growth

The Federal Reserve’s Financial Accounts of the United States (previously known as the Flow of Funds statistics) for Q1 2014 were published yesterday. The information provided in the report includes a relatively comprehensive overview of credit developments, i.e. not only credit from commercial banks but also lending from other sources (corporate bonds, commercial papers, government, […]

Encouraging signs that the US economy has gained more traction

We remain optimistic for US growth in the second quarter. The ISM manufacturing survey for the month of May was published last Monday. A decline was initially mistakenly reported. However, after officials at the ISM issued corrected figures, it appeared that the headline index had actually bounced back further, climbing from 54.9 in April to […]

United States: ISM indices point to GDP growth of around 3.0% in April

The ISM manufacturing survey was published last week. The headline index bounced back further, climbing from 53.7 in March to 54.9 in April, above consensus estimates (54.3). This was the third monthly increase in a row. However, the level reached in April remains well below readings registered in Q4 2014 (average of 56.7). The most […]

United States: job creation picked up sharply in April

We remain sanguine on the US economy. Non-farm payroll employment rose by a strong 288,000 m-o-m in April, well above consensus expectations (+218,000). Moreover, March’s figure was revised up (from +192,000 to +203,000), as was the number for February (from +197,000 to +222,000). Net revisions therefore cumulated to a positive 36,000 (see chart below). The […]

US GDP growth likely to accelerate in the second quarter

Impacted by particularly inclement weather, weak foreign demand and some downward correction in the pace of stockbuilding, GDP almost stagnated q-o-q in Q1. However, available monthly data point to a substantial rebound in Q2, giving further credence to our scenario that the Q1 weather-related loss of momentum in economic growth will prove temporary. Overall, we […]

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