![]() ![]() While we expect an increase in equity volatility, we expect it to be limited. Additionally, credit spreads, which tend to lead equity market volatility, project market stability for the months ahead (exhibit 4). ![]() However, yield curve measures in Europe and the emerging markets look good (exhibit 3). ![]() ![]() yield curve, which is a sign of economic growth and inflation expectations, has flatten as a result of the Fed’s policy tightening. The fixed income markets also support the Goldilocks economic scenario. In simple terms, in a goldilocks scenario, the economy is not expanding by a huge margin with inflation or shrinking into recession. The economic growth is neither too high to trigger inflation and nor too low for a slowdown. dollar should add a tailwind to the already strong global demand for U.S. A Goldilocks scenario in an economy refers to an ideal situation where there is a steady growth. Meanwhile, the recent depreciation of the U.S. Even productivity, which is a key input to economic growth, came in at a strong 3% last month. economy looks to have been particularly resilient in the face of Hurricanes Harvey and Irma.įor instance, consumer spending is up, as is business investment, which offsets the lack of business lending growth. As a result, the global manufacturing surveys rose to their highest level since early 2011. But analysts said this gain was in line with expectations and should not be alarming to the Fed.Globally, leading economic indicators are advancing nicely, which suggests continued economic momentum for the world’s major economies (exhibit 2).įor example, October manufacturing surveys, a component of the leading economic indicators, demonstrate that developed economies, such as the U.S., euro zone, and Japan, continue to perform well. The tight labor markets contributed to a slight uptick in wages in July, with wages rising by 0.4 percent to an average of $13.76 per hour. The overall jobless rate touched a 30-year low of 3.9 percent in April before rising to 4.1 percent in May and then edging back down to 4 percent for the past two months as the nation's longest economic expansion, now in its 10th year, gave most working Americans the best labor markets they have ever experienced. The strength in July was spread across a number of sectors, with manufacturing posting a solid advance of 46,000 jobs after showing little growth at all in the first half of this year. ''The Federal Reserve can pretty much declare victory since, based on these numbers, we are clearly achieving the soft landing they were hoping for,'' said Jerry Jasinowski, president of the National Association of Manufacturers. The unemployment report relieved worries that had been raised by a string of reports in recent days calling into question whether the economy was really slowing, including last week's report showing overall economic growth, instead of slowing in the spring, accelerated to a robust 5.2 percent.Īnalysts said they believed Friday's jobs pointed to much slower growth of around 3.8 percent in the second half of this year. ''This report makes clear that our economy is a steady tide that continues to lift the lives of millions of Americans,'' said Labor Secretary Alexis Herman, who spoke to reporters from Chicago, where she was campaigning with Vice President Al Gore, who is trailing in the presidential polls despite the good economy. The Clinton administration, which is counting on good economic times to persuade voters to keep the White House in Democratic hands, said that with the July report, the jobless rate has been below 4.5 percent for 28 straight months, and the economy has created 22 million new jobs since 1993. that continues to demonstrate incredible resiliency and flexibility,'' said Bill Cheney, chief economist at John Hancock Financial in Boston. ''July's employment report paints a picture of a vibrant but moderating economy. ![]()
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