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Category Archives: Weekly Economic Commentary

The Lowdown on the Shutdown: The Impact on the Economy and Federal Reserve

With the shutdown and debt ceiling debate now in the rear view mirror, the market’s attention– and possibly the Federal Reserve’s (Fed) as well– will likely shift to the performance of the private sector economy here in the fourth quarter of 2013 and in the first quarter of 2014. We continue to expect…

The Lowdown on the Shutdown

Dawning of a New Era?

Financial markets have reacted favorably to the news that Summers is no longer a candidate for several reasons: Most importantly, Yellen is more likely to continue the same policy path as Bernanke, and markets are embracing the certainty, even as the uncertainty around the Fed’s quantitative easing (QE) program ramps up…..

Dawning of a New Era?

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Data shows that the economy is not booming, the labor market is still struggling, and the Fed’s preferred measure of inflation has decelerated in recent months. All this suggests that although there is not a clear cut economic case for the Fed to begin slowing QE at the Septemeber 17-18 FOMC meeting, the overall economy…

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The upward revision to second quarter gross domestic product (GDP) garnered a great deal of market attention last week (August 26-30, 2013). The report, released on Thursday August 29, revealed that second quarter GDP – initially reported in late July 2013 as a 1.7% gain…

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Deficit Distraction

In the 12 months ending July 2013, the federal government spent $3.4 trillion and took in $2.7 trillion in revenues, making the federal deficit (revenues less spending) about $725 billion, the smallest deficit recorded since late 2008. At just 3.5%, the deficit as a percent of nominal gross domestic product (GDP) over the past 12 months was also the smallest since late 2008, and stands in sharp contrast to the…

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Deficit Distraction

Exporting Good Old American Know-How

The United States has run a trade deficit (importing more goods and services from other countries than it exports) since the mid-1970s. Although the trade deficit narrows during recessions — imports typically fall faster than exports during a recession — the trade gap has increased over time, and currently stands at around 3.5% of gross domestic product (GDP) [Figure 1]. This large and persistent trade deficit acts as a drag on overall GDP growth, since…

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Exporting Good Old American Know-How

Measuring Economic Expansion

The U.S. economy is now in the fifth year of the 12th economic recovery (or expansion) since the end of World War II. It is already the sixth-longest expansion and would have to last another year to become the fifth longest…

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Measuring Economic Expansion

Revisiting the Recovery

Last week, financial markets absorbed a nearly unprecedented amount of information on the health of the economy and corporate America. It was just the eighth week in the past 708 (since January 2000) that the U.S. Department of Labor’s monthly labor market report, the Institute for Supply Management’s (ISM) monthly Report on Business, the Federal Reserve’s (Fed) Federal Open Market Committee’s (FOMC) statement and the first look at gross domestic product (GDP) for the prior quarter were all released in the same week. In general, the equity market took the data deluge in stride, with far less volatility than it had seen in the past when those four key economic events occurred in the same week…

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Revisiting the Recovery

Midsummer Madness

Eight times a year, the outcome of the Federal Reserve’s (Fed’s) Federal Open Market Committee (FOMC) meeting becomes the focal point for market participants. Four times each year, the first look at the health of the economy in the prior quarter (via the Bureau of Economic Analysis’s (BEA) report on gross domestic product [GDP]), dominates the headlines. Similarly, at the start of each month, the Report on Business from the Institute for Supply Management (ISM) and the monthly labor market report from the U.S. Department of Labor are the centerpieces of any trading week. This week (July 29 – August 2, 2013), all four of these key events are on the docket…

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Midsummer Madness

Beige Book: Window on Main Street

 The latest edition of the Federal Reserve’s (Fed) Beige Book, released on July 17, 2013, described the economy as increasing at a modest-to-moderate pace, with little wage or inflation pressures. Housing and commercial real estate were mentioned as key drivers of growth. The report, along with comments made by Fed Chairman Ben Bernanke at his semi-annual Monetary Policy Testimony to Congress last week…..

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Beige Book: Window on Main Street