www.hifreqecon.com/WebinarSept2016
U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening BuildsJim O’Sullivan, Chief U.S. Economist
QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2016!Carl Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening BuildsJim O’Sullivan, Chief U.S. Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
-6
-5
-4
-3
-2
-1
0
0 4 8 12 16 20 24 28 32 36
1961-69 1970-73 1975-80 1980-81 1982-90 1991-2001 2001-07 2009- Change In Unemployment Rate From Peak During Recoveries, Percentage Points
Quarters After Peak
Current Cycle
1b. …Yet Unemployment Rate Has Generally Declined Rapidly
100
110
120
130
140
150
160
0 4 8 12 16 20 24 28 32 36
1961-69 1970-73 1975-80 1980-81 1982-90 1991-2001 2001-07 2009- Real GDP During Recoveries, Trough=100
Quarters After Trough
Current Cycle
1a. GDP Growth Has Been Weak By Past Standards
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
1.0
2.2
3.4
4.6
07 08 09 10 11 12 13 14 15 16
ECI: Private Sector Wages Per Hour, %chya ECI: Private Sector Wages Per Hour, Ex Incentive-Paid Occupations, %chya Employment Report: Average Hourly Earnings, %chya Atlanta Fed Per-Hour Wage Tracker, %chya
2b. Wage-Rate Measures Have Started To Accelerate
0
1
2
3
4
05 06 07 08 09 10 11 12 13 14 15 16
Core CPI Core PCE Cleveland Fed Median CPI Atlanta Fed Sticky CPI Cleveland Fed Trimmed-Median CPI Dallas Fed Trimmed-Mean PCE
% Change In Price Index From 12 Months Earlier
Fed Goal For PCE Prices
Core PCE
2a. Core Inflation Measures Have Drifted Up in The Past Year
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HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
4.5
5.5
6.5
7.5
8.5
9.5
11 12 13 14 15 16 17 18
Actual Reported Rate Mid-Point Of Fed Projections, As Of Nov 2011 Mid-Point Of Fed Projections, As Of Sep 2013 Mid-Point Of Fed Projections, As Of Sep 2014 Median Of Fed Projections, As Of Sep 2015 Median Of Fed Projections, As Of Sep 2016
Unemployment Rate, %
Median Fed Estimate For Longer-Run Normal Unemployment Rate: 4.8%
3. Unemployment Rate Has Been Close To Flat Recently—Just A Pause?
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HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
62
63
64
65
66
67
68
94 96 98 00 02 04 06 08 10 12 14 16
Labor Force Participation Rate, %
Shaded Bars Denote Recession Periods
4b. Participation Rate Is Up A Little
-6.8
-5.1
-3.4
-1.7
0.0
1.7
3.4
06 07 08 09 10 11 12 13 14 15 16
Household Survey Employment, Break-Adjusted, %chya Labor Force, Break-Adjusted, %chya Payrolls, Excluding Temporary Census Hiring, %chya
Shaded Bar Denotes Recession Period
4a. Labor Force Growth Has Almost Caught Up With Jobs Growth
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
1
14
27
40 2
5
8
11
86 89 92 95 98 01 04 07 10 13 16
Unemployment Rate, % (Left) NFIB Survey: Net % With Hard-To-Fill Job Openings (Inverted, Right)
Shaded Bars Denote Recession Periods
5b. “Hard To Fill” Vacancies (Plotted Inversely) Have Been Rising
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5 -55
-45
-35
-25
-15
-5
5
15 05 06 07 08 09 10 11 12 13 14 15 16
Conference Board Job Market Assessment, % Plentiful Minus % Hard To Get (Left) Unemployment Rate, % (Right)
5a. Downtrend In Unemployment Rate Resuming?
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
-840
-630
-420
-210
0
210
420
05 06 07 08 09 10 11 12 13 14 15 16
Reported Payrolls, Ex-Census Effects Model Estimate Based On ISM Employment Indexes
Shaded Bar Denotes Recession Period
Change, Thousands Per Month, 3-Month Average
6b. ISM Data Have Not Been Reliable For Payrolls Recently
32
38
44
50
56
62 200
300
400
500
600
700 98 00 02 04 06 08 10 12 14 16
Jobless Claims, 000s Per Week (Left, Inverted) Composite ISM Index (Right)
Shaded Bars Denote Recession Periods
6a. Mixed Signals From Jobless Claims And ISM Data
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
100
107
114
121
128
14 15 16
Fed's Nominal Broad Trade-Weighted Dollar Index, Jan 1997 = 100
7b. The Dollar’s Uptrend Has At Least Paused
-36
-27
-18
-9
0
9
18
27
26
32
38
44
50
56
62
68
96 98 00 02 04 06 08 10 12 14 16
Manufacturing ISM Export Orders Index (Left) Real Good Exports, %ch From 6 Months Ago In 3-Month Avg, Annual Rate (Right)
1998
7a. August Weakening In Mfg ISM Index Not Due To Exports
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
10
45
80
115
150
40
60
80
100
120
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16
Michigan Sentiment Index (Left) Conference Board Confidence Index (Right)
1998 Market Turmoil
Shaded Bars Denote Recession Periods
Debt-Limit Scare
Govt Shutdown
8b. Consumer Confidence Measures Have Generally Held Firm
-70
-35
0
35
70
-20
15
50
85
120
03 05 07 09 11 13 15
Overall CEO Outlook Index (Left) Net % Planning To Raise Capex In Next 6 Months (Right)
Shaded Bar Denotes Recession Period
Business Roundtable CEO Survey
8a. Biz Confidence Is Subdued, But No Sign Of Sudden Drop
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016 Jim O’Sullivan, Chief U.S. Economist
Daily Notes on the United States
2.1
2.3
2.5
2.7
2.9
3.1
3.3
3.5
0
2
4
6
8
10
12
14
83 87 91 95 99 03 07 11 15
10-Year Treasury Yield, % (Left) S&P 500, Log Scale (Right) Bars Denote Fed Tightening Periods
9b. Markets Have Varied During Fed Tightening Cycles
-1 0 1 2 3 4 5 6 7 8 9
90 95 00 05 10 15
10-Year Term Premium*, % Nominal 10-Year Treasury Yield, % 10-Year Risk-Neutral Yield*, %
*NY Fed data; methodology developed by Tobias Adrian, Richard Crump & Emanuel Moench.
“Bond Market Conundrum”
Shaded Bars Mark Fed Tightening Periods
9a. Term Premiums In The Bond Market Are Historically Low
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QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2016!Carl Weinberg, Chief Economist
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
200
400
600
800
1000
1200
1400
1600
1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
IMF Measure Of World Trade Value, Billions Of U.S. Dollars
Monthly Data Through June 2016
-1
0
1
2
3
4
5
6
7
-30
-20
-10
0
10
20
30
40
50
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
World Exports In U.S. Dollars, Percent Change Year Ago, Right Axis World GDP, Percent Change Year Ago, Left Axis
Yearly World Trade And GDP Data Through 2015
IMF Measure Of World Trade Value Vs GDP Growth
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
-20 -15 -10 -5 0 5 10 15 20 25
Jun 02
Jun 03
Jun 04
Jun 05
Jun 06
Jun 07
Jun 08
Jun 09
Jun 10
Jun 11
Jun 12
Jun 13
Jun 14
Jun 15
Jun 16
IMF Measure Of World Trade Volume, Percent Change Year Ago
Blue Line Is World Trade Volume In U.S. Dollars, Black Line Is Three-Month Moving Average Green Line Shows HFE Index Of G-7 + China Industrial Output To July 16
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
5
10
15
20
25
30
35
40
Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16
Japan: BoJ Holdings Of JGBs And JGTBs
As A Percentage Of Central Government Debt Issuance, Monthly Data To August 2016
70 75 80 85 90 95 100 105 110 115 120
Jul 86
Jul 88
Jul 90
Jul 92
Jul 94
Jul 96
Jul 98
Jul 00
Jul 02
Jul 04
Jul 06
Jul 08
Jul 10
Jul 12
Jul 14
Jul 16
Japan: Industrial Production Index
Seasonally Adjusted Monthly Index, 2010 = 100
Industrial Output Still 17.7% Below 2008 Pre-Crash Peak And Reduced To 1988 Levels
-0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6
30-Day 60-Day 90-Day 1-Year 2-Year 5-Year 10-Year 20-Year 30-Year
September 23, 2016
September 16, 2016
Japan Sovereign Yield Curve — Recent Changes
122
123
124
125
126
127
128
Jul 88
Jul 90
Jul 92
Jul 94
Jul 96
Jul 98
Jul 00
Jul 02
Jul 04
Jul 06
Jul 08
Jul 10
Jun 12
Jul 14
Jul 16
Census Benchmark In 2010 Distorts Trend
Japan: Population, Millions Of Persons
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
5
10
15
20
Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16
Euro Zone: ECB Holdings Of Sovereign Bonds
As A Percentage Of Central Government Debt Issuance, Quarterly Data To Sep 2016*
-30
-20
-10
0
10
20
30
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Euro Zone: Exports, Percent Change Year Ago
Yellow Line Shows Five-Month Moving Average
85
90
95
100
105
110
115
Jul 96
Jul 97
Jul 98
Jul 99
Jul 00
Jul 01
Jul 02
Jul 03
Jul 04
Jul 05
Jul 06
Jul 07
Jul 08
Jul 09
Jul 10
Jul 11
Jul 12
Jul 13
Jul 14
Jul 15
Jul 16
Euro Zone: Industrial Production Index
Seasonally Adjusted, 2010 = 100, Trend Since 2011 Drawn
Still Well Below 2008 Pre-Depression Highs!
-6
-3
0
3
6
9
12
15
Aug 99
Aug 00
Aug 01
Aug 02
Aug 03
Aug 04
Aug 05
Aug 06
Aug 07
Aug 08
Aug 09
Aug 10
Aug 11
Aug 12
Aug 13
Aug 14
Aug 15
Aug 16
Total MFI Lending Lending To SMEs Ex-Mortgages
Euro Zone: Bank Lending, Percent Change Year Ago
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
5
10
15
20
Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
United Kingdom: BoE Holdings Of Gilts In The APF
As A Percentage Of Total Gilt Issuance, Monthly Data To August 2016
-35
-30
-25
-20
-15
-10
-5
0
01 Q2
02 Q1
02 Q4
03 Q3
04 Q2
05 Q1
05 Q4
06 Q3
07 Q2
08 Q1
08 Q4
09 Q3
10 Q2
11 Q1
11 Q4
12 Q3
13 Q2
14 Q1
14 Q4
15 Q3
16 Q2f
United Kingdom: Current Account Balance, £Billions
Quarterly Rate, Line Shows Four-Quarter Moving Average
-60
-40
-20
0
20
40
60
-6
-4
-2
0
2
4
6
8
Sep 07
Mar 08
Sep 08
Mar 09
Sep 09
Mar 10
Sep 10
Mar 11
Sep 11
Mar 12
Sep 12
Mar 13
Sep 13
Mar 14
Sep 14
Mar 15
Sep 15
Mar 16
Sep 16
Sales Volumes, %chya (To Aug 16, Right Axis) CBI Index Of Retail Sales (Left Axis)
United Kingdom: CBI Index And Retail Sales Volumes
VAT Rate Distortions
750 1000 1250 1500 1750 2000 2250 2500 2750 3000
Aug 01
Aug 02
Aug 03
Aug 04
Aug 05
Aug 06
Aug 07
Aug 08
Aug 09
Aug 10
Aug 11
Aug 12
Aug 13
Aug 14
Aug 15
Aug 16f
M4 Total
M4 Lending
United Kingdom: Broad Money Supply M4 And Lending
Billions Of Pounds Sterling
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
500
1000
1500
2000
2500
3000
3500
4000
Aug 09
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
Monthly Change China: FX Reserves, Billions Of U.S. Dollars
0
5
10
15
20
25
Aug 07
Feb 08
Aug 08
Feb 09
Aug 09
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
China: Retail Sales, Percent Change Year Ago
Green Line Shows CPI-Adjusted Sales
-1
0
1
2
3
4
5
6
7
98 Q4
99 Q4
00 Q4
01 Q4
02 Q4
03 Q4
04 Q4
05 Q4
06 Q4
07 Q4
08 Q4
09 Q4
10 Q4
11 Q4
12 Q4
13 Q4
14 Q4
15 Q4
Overall Credit Intensity In GDP Ratio Credit Intensity In GDP Ex-SOBs Credit Intensity In National Income Ex-SOBs
China: Credit Intensity In GDP Or GNI, Three Measures
-200
-100
0
100
200
300
13 Q1
13 Q2
13 Q3
13 Q4
14 Q1
14 Q2
14 Q3
14 Q4
15 Q1
15 Q2
15 Q3
15 Q4
16 Q1
16 Q2
Change In FX Reserves Current Account Balance FDI Capital Flow (Positive Is Outflow)
China: Quarterly Balance Of Payments, Billions Of Dollars
-200
-100
0
100
200
300
400
Aug 06
Feb 07
Aug 07
Feb 08
Aug 08
Feb 09
Aug 09
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
China: Trade Balance, Seasonally Adjusted, RMB Billions
Black Line Is 12-Month Moving Average
Carl B. Weinberg, Chief Economist
www.hifreqecon.com/WebinarSept2016
HFE Global Webinar — September 28, 2016
0
2
4
6
8
10
12
14
16
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
Yearly National Income* Growth 10-Year Average (Demonstrated Potential)
*Calculated As GDP Plus Net Capital Outflow Estimated By HFE
China: Yearly GNI* Growth Rate, Percent
0
2
4
6
8
10
12
14
16
77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
Yearly GDP Growth 10-Year Average (Demonstrated Potential) GDP Growth
China: Yearly GDP Growth Rate, Percent
www.hifreqecon.com/WebinarSept2016
U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening BuildsJim O’Sullivan, Chief U.S. Economist
QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2016!Carl Weinberg, Chief Economist