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US November job numbers paint a strong macro picture

US employment rose by 155,000 in November (+1.7% year on year (y-o-y), decelerating from +237,000 in October. The three-month average dropped as well, but is still a healthy 170,000/month (it was 214,000 up to October 2018). November’s wage growth was unchanged from October’s pace of 3.1% y-o-y. Most cyclical indicators continue to flash green, and […]

Growing Fed doubts as neutral rate comes into sight

The Federal Reserve estimated the theoretical, inflation-adjusted (‘real’) neutral rate at 0.8% in Q3 18, slightly down from 0.9% in Q2, but in line with the average since 2016. Adding core PCE inflation of 1.8% year-on-year in October (down from 1.9% in September), this means a ‘spot’ nominal neutral rate of 2.6%. The Fed’s strategy […]

US and China reach tariff truce

A temporary trade truce was agreed between US President Donald Trump and China’s President Xi Jinping at a dinner during the G20 meeting this weekend. As part of this truce, the tariff rate on USD200 billion of Chinese imports will stay unchanged at 10% up to 1 March, instead of increasing to 25%, as planned, […]

US Federal Reserve hints it might turn off the auto pilot

The Federal Reserve (Fed) has been sending dovish signals in recent days: The previous exuberantly optimistic tone about the US growth has been pared down, as some pockets of data have softened, notably housing. Meanwhile, there is renewed debate about the landing zone of the current monetary tightening. Some Fed members want to change the […]

Untaxing times for US corporates

US corporates are delivering strong profits and this robust profit picture is further enhanced by a sharp drop in the corporate tax burden. According to NIPA (national accounts) data, the effective tax rate for the year ending in Q3 2018 reached a new low of 11.9%. President Trump’s December 2017 tax cuts led to a […]

By threatening growth in Texas, collapsing oil prices could hurt the US at large

The link between oil prices and the health of the US economy has changed considerably this decade, especially as a result of the domestic energy sector boom. The US produced a  record high of 11.7 million barrels per day last week, versus only around 5 million in 2008. The epicentre of this oil boom, linked […]

US retail prices show limited signs of tariff effect

US core inflation (excluding energy and food prices) remains relatively muted, slowing slightly to 2.1% y-o-y in October, from 2.2% in September. The average over the past year is 2.1%. To some degree, the surprise was that prices did not increase more, especially given fresh tariffs on Chinese imports. In late September the Trump administration […]

Rising healthcare costs continue to be a hot-button issue in US politics

Healthcare policy was a key theme in the midterm elections and it seems that Democrats capitalised on this popular anxiety better than Republicans (they gained enough seats in the House of Representatives to secure a majority). Indeed, one of President Trump’s key failures over the past two years has been around healthcare policy. The Congressional […]

Trump fails to upset the law of (midterm) gravity

As predicted, Democrats gained enough seats in the House to form a majority (their first since Barack Obama’s first term). As also expected by polls, they lost seats in the Senate, where they remain a minority. With a Congress that will likely be gridlocked, legislation, including tax legislation, is likely to be meagre, leaving the […]

US employment and wage growth continue to shine

US employment grew by 250,000 in October (+1.7% y-o-y); the 3-month average is now a solid 218,000/month, and October payroll results were strong, which bodes well for US GDP growth in Q4. It appears therefore that the US’ heated rhetoric towards China is having little effect so far on the US economy. The mere fact […]

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