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The Bank of England’s financial (in?)stability report is due out on Thursday. Read more
It was a rough day on the economics beat here in Washington. Rough in terms of America’s hopes for a strong economic recovery, that is.
Let’s recap. At 8.30am, the labor department released its weekly jobless claim figures. They were up unexpectedly to 472,000. Back in April, when job creation seemed to gathering momentum, many economists were looking at the stubbornly weekly jobless claims data as an aberration. Eventually, the numbers would have to move closer to 400,000. But now, the opposite seems true and private payroll growth looks destined to be modest, with persistently high unemployment and therefore high jobless claims. We’ll know more tomorrow from the more important monthly government jobs report, but still, the labour market outlook is not rosy.
Then, at 10am, a double punch in the face. The ISM manufacturing index dropped a lot more than expected in June, suggesting that one of the bright stars of the recovery is beginning to fade. Most economists knew that after inventories were restocked, there would be some loss of momentum. Read more
Staff at the Federal Reserve Bank of San Francisco, home to Janet Yellen, the freshly-nominated Fed vice-chair, have just offered some fresh insight into their thinking on the shape of the US recovery.
In a 4-page letter published today, researchers Justin Weidner and John Williams took a close look at the pace of economic rebounds from previous recessions, starting in the post-second world war period, and conclude that this time around, US growth will reach nearly 4 per cent this year, and about 3.5 per cent next year. Read more
Federal Reserve Governor Elizabeth A. Duke today echoed others at the Federal Reserve, saying that she expected a “moderate” recovery in economic activity in 2010, and that businesses would “cautiously” begin to add jobs. And she, like others, said that the recovery depends largely on improving credit conditions.
“In my view, the outlook for economic activity depends importantly on our ability to build on the progress to date in improving the operation of financial markets and restoring the flow of credit to households and businesses,” she said in a speech in Raleigh, North Carolina.
Her stance is nothing new for the Fed, and she’s the third governor to repeat the sentiment in the past few weeks. Yesterday, Donald L. Kohn, Vice Chairman, said: “Lingering credit constraints Read more
Andrew Sentance, an MPC member has become the first Bank of England official to match his rhetoric to its rosy forecast, writes Chris Giles of the Financial Times. Good for Sentance. This is a very welcome development. The Bank was stretching its depleted credibility to the limit in persisting with forecasting a strong recovery while saying the opposite. Read more
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