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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Preparing the markets for a rate hike is a process in which the Fed gradually has to back away from its unduly pessimistic stance of recent months. This will take some time, but the process is now underway.
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At this level the index is consistent with spending growth of about 3.5 percent, in line with recent economic data. But watch out for a dip next month in the wake of the renewed spike in gas prices. Overall, though, quite robust.
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No doubt these numbers will be taken by the market as a clear sign of a softening housing market and, by implication, an indication that higher interest rates are biting. We are much more skeptical: housing starts lag home sales, which have been depressed in recent months more by lack of inventory than by higher interest rates.
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Only a few years ago, auto sales numbers like those seen recently would have automatically lead to expectations of higher prices, ... Now, increasing transparency in car prices, substantially due to the Internet, together with the automakers' ability to hold down unit labor costs, means that stronger sales do not necessarily lead to higher prices.
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The pattern in claims in recent months is strikingly similar to 1990 -- a long slow climb and then a sudden acceleration as layoffs accelerated,
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As far as we can tell, confidence now seems to have run a bit ahead of the improvement in the stock market, and the failure of the Nasdaq and Dow to make further progress in recent weeks makes it doubtful that confidence will continue to rise at the May pace. The sharp rise in unemployment is likely to become a negative factor, too.
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This is a welcome surprise; the trend in claims in recent weeks has been strongly upwards.
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This is a significant decline in confidence, ... Presumably the combination of higher interest rates and stagnant stock prices lies behind the moves, but the key point is that the steady rise in recent months has abruptly begun to reverse.
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This increase reflects the upturn in the markets in recent weeks; any further gain in the near-term requires a further firming of stocks,
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It is hard to make the case that the inflation threat from import prices is serious. The trend is clearly not as good as in the recent past, but it is not bad enough to cause any problems on its own.
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Overall, the recent sales data appear to point to a renewed upturn in spending.
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Looking forward, we can be unequivocal: New home sales have to fall, because the level of demand for new mortgages for house purchase recently has not been sufficient to sustain current sales rates.
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His conclusion, in essence, is that much of the productivity explosion of recent years is permanent, but there is a risk that there is significant cyclical element too. Unfortunately, this leaves us none the wiser as to his intentions at the next (Federal Open Market Committee) meeting.
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The Fed's Beige Book acknowledges some of the improvement evident in recent economic data, but the tone of the survey could not yet be described as a ringing endorsement of the recovery story,