Tag: economic recovery

My updated European macro outlook for 2013 is positive

My updated European macro outlook for 2013 is positive

Despite the grandiose title of this post, I intend to keep my comments brief. Having had a few days to digest the news without having to write, I come back somewhat more optimistic about the European economy. I wouldn’t call myself a bull but I see the global upswing continuing through 2013 and into 2014. Below are some notes on specifics.

On continued recovery in the US

On continued recovery in the US

More and more the economic data coming out of the US seems to support continued recovery. The housing data certainly does. Consumer credit is increasing. And the Fed Flow of Funds data shows household balance sheets significantly repaired. Moreover, jobless claims continue to trend down. The missing link now is wage growth, which could well be on the horizon.

Comments on Europe and thoughts on the cyclical recovery in the US

Comments on Europe and thoughts on the cyclical recovery in the US

Europe is in recession right now, but the US is in a weak but fairly long-lived economic recovery. The difference in economic fortunes owes entirely to differing policy responses in both regions. In Europe, the economic paradigm has favoured austerity as a policy tool. And the result has been fiscal retrenchment met with varying levels of additional private retrenchment – no confidence fairies here. That is the reason for the recessions across Europe. In the US, the policy response has been varying degrees of fiscal and monetary stimulus. And the result has been a muted recovery in both output and employment. The question is whether either of these policy paths is sustainable. I say no on both counts and want to address. Here’s why.

On the shock contraction in US GDP

On the shock contraction in US GDP

US GDP contracted at a 0.1% annualised rate in Q4 of 2012 according to preliminary estimates announced by the US government earlier today. This contraction was well below consensus estimates and comes as a shock to most of the analyst community. Nonetheless, most macro analysts are not concerned because consumer spending in the US still seems to support continued recovery.

Citigroup economic surprise index (Bloomberg)

Economic Surprise Index has turned positive

By Sober Look The Citi Economic Surprise index was fairly accurate in pointing to a US slowdown in the first half of 2012. One therefore should not dismiss the recent reversal in the indicator’s trend. The index just went into the positive territory in spite of today’s poor employment report. Washington Post: – While today’s jobs data trailed forecasts, better-than- projected reports […]

Brief Note on Big Surge in US Consumer Credit

Brief Note on Big Surge in US Consumer Credit

Late yesterday the US reported the biggest jump in consumer credit in a decade. It reinforces the signal of the gradual healing of the labor market and the resilience of the US consumer. The report increases the risk that the November personal consumption expenditures are revised higher from the initial 0.1% estimate.