Ian Shepherdson
Ian Shepherdson
Ian Shepherdson is an award-winning British economist. He is the founder and Chief Economist of Pantheon Macroeconomics, an economic research firm located in Newcastle, England, with an office in White Plains, New York. In February 2015, he was named The Wall Street Journal's US economic forecaster of the year for the second time, having previously won the award in 2003...
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The headline reflects a 3.2 percent rise in gasoline prices. Natural gas and electricity prices were also much stronger than the PPI suggested. The good news is the 0.1 percent core, which supports the Fed's view that transitory factors have boosted inflation in recent months.
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July sales always looked unsustainably high relative to the level of mortgage applications so a correction was due. This drop in sales does not mark the start of a sustained weakening.
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A strong U.S. corporate recovery is brewing right now -- this survey implies 4 percent gross domestic product growth,
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These are spectacular numbers and confirm that the labor market is not at the moment the source of anything that could be plausibly described as inflationary pressure.
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The bottom line here is that the month-to-month volatility in the durable orders data is such that the true information content in a single report is very small -- there's just too much noise.
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Given the complete absence of meaningful inflationary pressure evident in the economy now, and -- as the Fed put it, 'tentative evidence of a slowing in certain interest-rate sensitive sectors of the economy' -- we think there is very little chance that rates will rise again in the current cycle.
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This is a surprise but it cannot last. We think the other elements of the report give a better indication of the strength of the market, with supply of single-family homes up to 5.3 months, compared to just 4.0 a year ago. Price gains have slowed to 7.8 percent year-on-year, down from 10.4 percent in Feb and a 19-month low. Much lower sales will follow.
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Most notable was the leap in the prices-paid index, ... this is simply a reflection of higher oil prices but it may not have been fully anticipated in the markets.
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As the newspapers remind us every day, job layoffs are still high, but the point is that they now appear to be slowing, ... The worst is over, and the decline in output and employment will soon slow.
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If this continues, it can do real damage to core inflation, making it all the more important that the Fed succeeds in slowing the economy to ease inflation pressure.
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One steep drop in housing starts does not make a downward trend, especially in a month which was very wet in the West and very cold in the Northeast. Still, the data are consistent with other signs of a softening housing market, most notably the drop in homebuilders' confidence. What really matters, though, is whether sales will fall fast enough to turn a softening into a collapse.
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The Fed is now explicitly conducting monetary policy with the aim of supporting stock prices,
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Mr. Greenspan said next to nothing about the current economic situation in his testimony, ... does not sound to us like a signal he has changed his mind on the appropriateness of the current level of interest rates. The rest of the testimony was a clear and unambiguous plea to Congress not to abandon fiscal discipline.
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This level of the ISM is not consistent with recession,