Insight & Thought Leadership on the Global Economy

He is a master of digging up data and then explaining it in a language foreign to most economists: plain English — David Leonhardt, Washington Bureau Chief, The New York Times

U.S. Macro Outlook: Hanging Tough

  • U.S. employment has grown faster than expected given the restraint from federal fiscal policy.
  • Real GDP growth has slowed nevertheless, likely ending the second quarter below 2% annualized.
  • Improved consumers confidence shows in rebounding vehicle and house sales.
  • Markets are skeptical that the Fed can continue to hold long-term interest rates down.
  • Unrest in the developing world threatens a growing market for U.S. exports.
  • Threats to a stronger U.S. recovery, while substantial, are less severe than they were a year ago.

The U.S. economy appears to be moving forward gracefully despite raging fiscal headwinds. The tax increases and government spending cuts, which will lower GDP by an estimated 1.5 percentage points this year, have done less damage than expected. Employment in particular has outperformed expectations: If anything, job growth has picked up in recent months. Payrolls have recently been adding close to 200,000 positions per month, topping forecasts of less than 150,000 at the start of the year.

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