Housing Starts, Holiday Sales Hopes Point to Resurgent U.S.
Despite growing concern over America’s economic growth, above expectations housing starts and bullish forecasts for holiday retail sales indicate underlying strength in consumer demand.
Category: United States
U.S. Budget Deficit Falls on Higher Tax Revenue
The U.S. government’s budget deficit shrank to its lowest amount in 8 years, thanks mostly to a record amount of tax revenue. Total tax receipts rose 7.6% while outgoings rose 5.2%, causing the deficit to fall to its lowest amount since the global financial crisis. The current deficit has fallen to $438.9 billion for the 2015 fiscal year, a 9.2% decline from the prior year.
Personal Incomes Rise, Home Sales Plummet
Personal incomes and spending rose, but home sales fell significantly despite expectations of growth.
Pending home sales fell 1.4% in August compared to the prior month, while remaining 6.1% above the level of total pending home sales in August 2014. The National Association of Realtors released a report containing its Pending Home Sales Index, which the NAR says indicates a fall in total home sales is coming later in the year.
New House Leadership to be more Confrontational?
Two developments make a shutdown of the US government on October 1 less likely. First, the outgoing Speaker of the House made it clear he is determined to avoid the government shutdown, and with his resignation (as of the end of October), he is freed from some of the political constraints.
Fiscal Policy Dragging Down Monetary Policy
The big question these days is when the Federal Reserve will finally raise its target interest rate for the first time in almost a decade. Its monetary policy committee is meeting this week to decide whether to do just that.
Unfortunately, this is the wrong question. Whether the Fed moves this week or next month will make little difference over time. If it takes too small a step now – or none at all – it can take a bigger step later.
U.S. Growth Challenged as Prices, Sentiment Fall
Key indicators of falling aggregate demand throughout the United States rang alarm bells with investors, who sold stocks off in early morning trading.
Wholesale prices in the U.S. saw little change, with lower fuel costs dragging total producer prices lower. Producer prices stagnated in August after showing a 0.2% advance in July. Despite the worrying indication of a deflationary trap stirring, the results were better than expected. Analysts had expected a 0.1% decline in prices.
A Durable Report
The US dollar and equity futures responded favorably to the stronger than expected durable goods orders. The sizable upward revision in the June shipments (from 0.3% to 0.9%) underscores expectations of an upward revision to Q2 GDP when reported tomorrow.
IMF Warns That Fed Could Stall US Economy
The International Monetary Fund (IMF) is a global organization made up of 188 member countries that works to foster international financial stability and sustainable growth. Thus, when it weighs in on a nation’s financial policies, those opinions usually carry some weight. This is true even when the economy in question belongs to the United States.
Recent Data is Supporting the Federal Reserve’s View on the U.S. Economy
The US dollar began the new week bid in Asia, but surrendered most of those initial gains before the start of the European session. The lack of fresh news has seen the greenback drift higher in Europe, perhaps waiting for fresh direction from North America.
The TPA Vote is Near and an FOMC Meeting Looms Over Next Week
The US dollar is set to close the week on a strong note. The relatively constructive data is boosting confidence that the Federal Reserve will have the opportunity it has been looking for to begin, however gradual, the normalization of monetary policy. At the same time, the Greece impasse remains, and German Chancellor Merkel has weighed in suggesting that too strong of a euro impedes reforms in Spain and Ireland. This, of course, leads to fresh selling.
