Publications - Keybridge LLC

U.S. Economic News

July 28, 2017

U.S. Economic Indicators

The initial estimate of Q2 GDP indicates that the U.S. economy expanded at an annualized rate of 2.6%, in line with consensus estimates. The reading reflects a rebound in consumer spending and a continuation of healthy business investment, although residential investment fell by the most since 2010. BEA

The University of Michigan Consumer Sentiment Index fell 1.7 points to 93.4 in the final July reading but is up 3.4 points on the year. The Index of Consumer Expectations fell to 80.5 and is down 9 points year-to-date, but The Current Economic Conditions Index edged up 0.9 point to 113.4. Report

According to the Employment Cost Index, compensation costs for civilian workers rose 0.5% in the second quarter and are up 2.4% on the year. Wages and salaries were up 2.3% on the year and benefits were up 2.5%. BLS Report

U.S. News

The Wall Street Journal reports that the U.S. states enjoying the fastest economic growth have been benefitting greatly from the revitalized U.S. energy sector. While national economic growth slowed in the beginning of 2017, states such as Texas, West Virginia, and Nevada saw growth accelerate significantly as mining output jumped. WSJ

9 Million Missing U.S. Workers: Where Did They Go? What Does Their Disappearance Mean for the Fed’s Monetary Policy?

The U.S. labor force participation rate has fallen 3.6 percentage points since 2007, meaning there are 9 million “missing” workers today. In this analysis, Keybridge examines several factors driving this trend, the most important being an ongoing shift in demographics as the baby boom generation retires. We conclude that labor market conditions remain tighter than many believe — even though expected wage pressures have not yet ensued.

U.S. Economic News

July 27, 2017

U.S. Economic Indicators

New orders of manufactured durable goods jumped 6.5% in June after decreasing 0.1% in May (revised), and are up 5.0% year-over-year. Excluding transportation, new orders rose 0.2% (up 4.9% Y/Y). Census Bureau Report

The U.S. Census Bureau Advance Economic Indicators Report shows that the goods deficit decreased 3.7% in June. Meanwhile, wholesale inventories and retail inventories both rose 0.6%. Census Bureau Report

Initial jobless claims increased 10,000 to 244,000 last week. The four-week moving average was also 244,000, unchanged from the previous week. DOL Report

U.S. News

The Wall Street Journal reports that Federal Reserve officials plan to begin reducing the Fed’s balance sheet “relatively soon” and unanimously voted to leave interest rates unchanged. However, Fed plans to being shrinking its balance sheet may be complicated by a looming showdown over the Federal borrowing limit, which may cause turmoil in financial markets. WSJ

According to the Wall Street Journal, persistent weakness of the U.S. dollar against a basket of currencies has put continued downward pressure on inflation outside of the U.S. Central bankers around the world have been attempting to stimulate inflation with loose monetary policy, but the continued appreciation of foreign currencies against the U.S. dollar has been limiting these efforts. WSJ

U.S. Economic News

July 26, 2017

U.S. Economic Indicators

New home sales edged up 0.8% to a seasonally adjusted annual pace of 610,000 in June, and are 9.1% above the June 2016 rate. The median sales price fell to $310,800 and the inventory of new homes inched up to 5.4 months at the current sales rate. Census Bureau Report

U.S. News

According to the Wall Street Journal President Trump is considering both Gary Cohn and Janet Yellen as the next chair of the Federal Reserve. Chairwoman Yellen’s term expires early next year, and there remain three vacancies on the board of governors after Daniel Tarullo stepped down earlier this year. WSJ

The Wall Street Journal reports that the Trump administration still has not yet decided whether to impose tariffs on steel imports for “national security” reasons. President Trump indicated that there is extensive study required before the U.S. makes a decision on the tariffs. WSJ

U.S. Economic News

July 25, 2017

U.S. Economic Indicators

The Conference Board’s Consumer Confidence Index increased to 121.1 in July following a marginal decline in June. The Present Situation Index reached a 16-year high of 147.8 and the Expectations Index rose to 103.3 after cooling last month. Conference Board Report

U.S. News

Neil Irwin of the New York Times questions whether low productivity causes slow growth (the mainstream view held by economists), or slow growth causes low productivity. In discussing the second possibility, Irwin notes that a tight labor market and rising wages may, “get companies to consider more of those big-ticket innovations that generate productivity growth.” NY Times

The Wall Street Journal reports that although many large businesses have embraced flexible work practices, others are pulling back on remote-work arrangements. Research has found that telecommuters are often more productive than their in-office colleagues, but managers are increasingly demanding more in-person collaboration and control over the workday. WSJ