If you could only track one economic indicator to monitor the economy the trend in payrolls would be a solid choice. Think of it as the fuel that powers consumer spending engine, which accounts for nearly 70% of economic activity. The good news is that the labor market still looks solid, based on several conventional metrics. But an alternative indicator your editor is watching introduces a degree of doubt about what may be in store for 2025.
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Macro Briefing: 21 November 2024
Business inflation expectations in November remained “relatively unchanged at 2.2%, on average, according to the Atlanta Fed. The bank’s latest poll shows inflation expectations holding near the lowest level in 3-1/2 years.
Is Fed Policy Still Too Tight?
The next round of central bank decisions could rank among the most challenging in recent history, perhaps in decades. Policy hawks and doves can cite a fair amount of evidence for supporting their respective views. The deciding factor, as usual, will be the incoming data. But waiting for clear signs could risk the Fed’s success to date in taming inflation without damaging economic growth. On the other hand, one can argue that policy is still too tight for an economy that appears to be slowing, albeit modestly.
Macro Briefing: 20 November 2024
US housing starts fell in October, falling 3.1% from September and 4.0% below the year-ago level. “Hurricanes Helene and Milton are likely to have affected housing activity during October,” advises Haver Analytics. Christopher Rupkey, chief economist at FWDBONDS, notes: “Despite the weather impact on building down in the South, the recession in residential housing construction remains deep in the woods with no daylight seen for buyers facing supply shortages as they hunt for new single-family homes.”
Desperately Seeking Yield: 19 November 2024
There’s little about recent history that reflects stability, with at least one exception: the average trailing payout rate on a globally diversified portfolio.
Macro Briefing: 19 November 2024
US home builder sentiment rises for a third straight month in November, reaching the highest level since May but remains below the neutral 50 mark. “With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments,” says Carl Harris, chairman of NAHB, which publishes the data. “This is reflected in a huge jump in builder sales expectations over the next six months.”
Slower Growth Expected For The US Economy In Q4
Fourth-quarter economic output for the US looks set for another downshift, based on CapitalSpectator.com’s initial GDP nowcast. The estimate reflects the median for a set of nowcasts published by several sources.
Macro Briefing: 18 November 2024
US retail sales rose more than expected in October, reviving doubts about the wisdom of additional rate cuts. “Retail sales data [in October] make many in the markets wonder if another rate cut at the December meeting is warranted at all,” says Christopher Rupkey, chief economist at FWDBONDS. “With fiscal policy expected to shift into high gear on the pro-growth stimulus side, perhaps the Fed’s monetary policy should not be putting another log on the fire to fuel growth by lowering rates, as it could lead to a return of inflation.”
Book Bits: 16 November 2024
● False Prophets of Economics Imperialism: The Limits of Mathematical Market Models
Matthew Watson
Summary via publisher (Agenda publishing/Columbia U. Press)
This book studies the methodological revolution that has resulted in economists’ mathematical market models being exported across the social sciences. The ensuing process of economics imperialism has struck fear into subject specialists worried that their disciplinary knowledge will subsequently count for less. Yet even though mathematical market models facilitate important abstract thought experiments, they are no substitute for carefully contextualised empirical investigations of real social phenomena. The two exist on completely different ontological planes, producing very different types of explanation.
The Trump Factor Takes A Toll On Foreign Stocks
The election victory has fueled a strong rally in US equities, but Donald Trump’s comeback is seen as a new risk factor elsewhere as Washington prepares to pivot to new edition of an “America First” policy.