Author Archive

US business cycle celebrates its 100-month anniversary

The US expansion, which started in July 2009, just crossed its 100-month mark, making it – for now – the third longest in the National Bureau of Economic Research database, which stretches back to 1854. The longest growth was 119 months between April 1991 and February 2001. The exceptional length of this expansion, already well […]

US growth forecast raised

We are raising our US GDP forecast for 2017 (+0.1 percentage point to 2.3%) and 2018 (+0.3 point to 2.0%) on the back of stronger momentum in Q4 2017. Accelerating global growth is a tailwind for the US economy – as seen in the recent sharp pick-up in exports, particularly to emerging markets. Reconstruction efforts […]

Low loan demand: a bad omen for investment

A key question for the 2018 US outlook, and beyond, is whether US firms will finally open their purses and invest more after years of frugality. Investment is key to sustaining the current expansion. Recent buoyant business surveys like the ISM manufacturing index seem to point that way. However, a chasm has opened between what […]

US employment—It’s Goldilocks!

October payrolls showed the US economy remains in fine fettle, as underlying payroll growth remained firm. Robust labour-market signals echo recent solid business surveys, strong job opening data, and very low levels of initial jobless claims. Payrolls rose 261,000, reversing some hurricane-related weakness (payroll growth was only 18,000 in September). The unemployment rate dropped to […]

Federal Reserve – New sheriff in town

On 2 November, President Donald Trump nominated Jerome (‘Jay’) Powell to succeed Janet Yellen at the helm of the Federal Reserve System, confirming recent press speculation. The next step before the new Fed chairman can enter office next February is Senate confirmation. This looks unlikely to be problematic for Powell. From a monetary policy perspective, […]

Signs that US rental boom could slow

The US has witnessed a striking boom in the construction of rental residential units in recent years. This can in part be explained by the rising allure of downtown living among millennials and ageing baby boomers alike. The boom can also be explained by the lingering effects of the subprime crisis, and the restrained access […]

NAFTA update — Calling Trump’s bluff

NAFTA renegotiation talks, which have hit a wall as a result of the US’s blatantly mercantilist and protectionist approach, will resume in mid-November in Mexico against the backdrop of some heavy-handed anti-dumping initiatives by the US authorities, with the slapping of punitive trade tariffs on some Canada-manufactured airplanes in October still resonating vividly. Nonetheless, we […]

The U.S. economy is doing fine

US GDP grew 3.0% q-o-q SAAR in Q3 2017, pushing up the y-o-y print to 2.3%. In a word, the US economy is doing fine, although it still lacks sparkle. The impact of August hurricanes was barely perceptible. IT investment was particularly solid, rising 8.6% y-o-y, but consumer spending growth was tepid (up 2.6% y-o-y), […]

Stagnant tax collection is a further challenge to tax cuts

US fiscal year 2017, which ended on September 30, did not end on a high note. The deficit rose to 3.5% of GDP, edging up 0.3 percentage point from fiscal year 2016. This deterioration stands in stark contrast to the overall improvement in the US economy. GDP growth remains above potential, and unemployment has been […]

Still a long road to US tax overhaul

The US Senate this week approved a budget resolution, which effectively allows it to side-step Democrats’ opposition to start formulating tax cuts. The bottom line is that the Senate vote increases the odds of some tax cuts actually happening, but we think that the road to the finish line will be bumpy and that any […]

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