Manufacturing Crashes to Crisis-Level Lows
Manufacturing in the United States has turned significantly weaker, hitting its lowest point since 2009. In May, manufacturing activity fell because of weak new order growth and poor inventories.
Category: United States
June Interest Rate Preview: Uncertainty Mounts
Investors are reconsidering earlier expectations that the Federal Reserve will increase interest rates in June. After several speeches from regional Fed presidents strongly suggesting a rate hike was imminent, Federal Reserve president Janet Yellen struck a more conservative tone late last week, hinting that the Fed might wait a little longer before raising interest rates.
U.S. GDP Growth Estimates Boosted on Strong Economic Data
A number of economic studies show renewed strength in the American economy, helping the Federal Reserve boost its estimates for growth. The Atlanta Federal Reserve’s real-time GDP estimator, GDPNow, has raised its estimates for growth to 2.9%, an increase of 16% from the last estimate. That is the highest growth estimate in over a year.
The boost is being driven by renewed business investment in the United States, which rose from a negative reading to 0.4% thanks to a Census study of durable manufacturing goods.
U.S. Sees Higher Trade Deficit, Lower Services Activity
American trade policy is failing to shrink the trade deficit with other countries as weak demand crimps services industries throughout the country. The trade balance between the United States and foreign countries rose 3.4% on a month-over-month basis in April, rising to $57.5 billion; however, that also represents the lowest trade deficit since February 2015.
Investors Cheer New Home Sales Blowout
Investors dived into the stock market after American home sales crushed expectations with double-digit gains. New home sales in April soared to 16.6% more than sales in March and 23.8% from a year ago, according to a new report by the Census Bureau.
Economists: U.S. to Face Greater Inflation
After several years of weak inflation, economists now believe Americans will see higher prices in 2016 and beyond. Weak inflation that fell into near deflation in 2015 has reversed course, with the U.S. consumer price index (CPI) rising to its highest point since 2013. The CPI for all items rose over 1.1% in April, and has shot up markedly after falling earlier in 2016. Excluding food and energy, the CPI rose over 2.1% in April.
The Week in Review: The Fed Fights the Market
The Federal Reserve dominated economic news this week, as the central bank prepared America for higher borrowing costs. Citing economic strength despite just 0.5% GDP growth in the first quarter of 2016, the Federal Reserve reiterated its view that June would be an appropriate month to increase its Federal funds rate target. This rate influences the interest rates on many forms of debt, from U.S. Treasuries to mortgages.
Housing Starts, e-Commerce Rise Boosts Inflation
More houses are being built in America, and Americans are buying more products online, which is helping inflation rise. New housing starts jumped 6.6% from the prior month to 1.17 million in April, according to a new report by the Census Bureau. Single-family building permits saw a 1.5% rise from March, and are continuing to drive the increase in housing in America.
Fed Eyes June Rate Hike
Mixed economic data persists, but that isn’t stopping the Federal Reserve from raising interest rates. In an attempt to make borrowing more expensive for consumers, the Federal Reserve may increase its Federal rate target in June.
While markets have been pricing a very low probability of a June rate hike, the Federal Reserve has gone on the offensive, with officials giving several interviews with the press hinting that June will see a rate hike.
Retail Sales Rebound Hints at Improving U.S. Economy
Retail sales in America posted a surprising jump, as consumers are feeling more comfortable about opening their wallets. Retail sales rose 1.4% on a month-over-month basis in April after falling 0.3% in March on a seasonally adjusted basis. Sales also rose 2.7% on a year-over-year basis, with non-store retailers seeing a 10.2% gain on a year-over-year basis.
That jump helped to boost overall retail sales from February to April, which saw a 2.8% year-over-year gain.
