Articles authored by Sonu Varghese

All year we’ve been in the camp that the Federal Reserve is unlikely to cut rates, and we have positioned our portfolios accordingly – overweighting cash over longer-term bonds. This was based on our view that there would be no recession in 2023, even as inflation moves lower and unemployment remains low. This was in …

We publicly started releasing our proprietary leading economic index (LEI) in our 2023 Mid-Year Outlook, which we use to give us an early warning signal about economic turning points. We produce an LEI for the US and 29 other countries, each one custom built to capture the dynamics of those economies. The individual country LEIs …

The October Consumer Price Index (CPI) report was chockful of good news. Headline inflation was flat in October, below expectations for a 0.1% increase. The October “surprise” came on the back of lower gasoline prices, which fell 5%. But that counts, and even more so because it means households have more income – keeping consumption …

Lost in all the consternation over a weak payroll report last week was the fact that we got good productivity data a couple of days before that. Labor productivity rose at an annualized pace of 4.9% in Q3. This is not entirely surprising because we already knew output surged in Q3, and hours worked didn’t …

The October payroll report was weaker than expected on several fronts: Monthly job growth came in at 150,000, below expectations for a 180,000 gain. The unemployment rate ticked up from 3.8% to 3.9% Average hourly earnings growth rose at an annualized pace of 2.5% in October, well below expectations for close to a 4% increase. …

You just can’t put this economy down. There are expectations and then there’s reality. Earlier this year, expectations were for a “mild recession” in the second half of 2023, and then that got revised to a more optimistic outlook as time went by (and data came through). On the eve of the third quarter GDP …

It’s not been a good couple of years for macro forecasters in general. First, they said inflation would be transitory, but it persisted longer than most people anticipated (including the Fed). The other big call was for a recession in 2023, which obviously hasn’t panned out. Granted, the year is not done yet, but safe …

A year ago, a Bloomberg Economics model projected a recession within the next 12 months with 100% probability. That’s a right, a recession was all but certain. Well, fast forward 12 months and not only did we not have a recession, but economic growth has accelerated over the past quarter and is showing strong momentum …

Headline inflation as measured by the consumer price index (CPI) ran hotter than expected in September, rising 0.4% over the month and 3.7% over the past year. The culprit was rising energy prices. Gas prices at the pump increased 2.1% in September, following on from the almost 11% gain in August. Long story short, inflation …

It really doesn’t get much simpler: the US economy relies on consumption, and consumption comes from income. Overall income in the economy is dependent on three factors: Employment growth Hourly wage growth Number of hours worked The above three are running strong, and so overall income growth across the economy is strong. That’s powering consumption. …