Sonu Varghese
Why We Think the October Payroll Report Was Just What the Doctor Ordered for Markets and The Fed
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. …
Sonu Varghese
November 3, 2023
The Energizer Bunny Economy and What Comes Next
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 …
Sonu Varghese
October 27, 2023
Here’s Why the Economy Has Defied Recession Forecasts
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 …
Sonu Varghese
October 25, 2023
Let’s Call It Like It Is: The Economy Is Strong, and There’s No Recession on the Horizon
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 …
Sonu Varghese
October 20, 2023
Why We Believe the Inflation Report Was Better Than What the Headlines Suggest
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 …
Sonu Varghese
October 13, 2023
Here’s Why Yields Are Rising: The Economy is Strong
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. …
Sonu Varghese
October 6, 2023
That’s Cracked! Consumers May See Relief at the Pump Despite High Oil Prices
It seems like there’s always one shoe or another ready to drop on the economy. There were fears over a government shutdown (punted for now) which Ryan wrote about, along with the restart of student loan payments and strikes. Other issues that have investors worried are another bank crisis (like Silicon Valley Bank), or a …
Sonu Varghese
October 3, 2023
The Strikes Are Telling Us Something Really Important About the Economy
Strikes, student loans, and shutdown have been the top 3 concerns for investors in recent weeks. Earlier this week, Ryan wrote about the government shutdown, and I discussed why the student loan payment restart may not be a huge concern. I want to tackle strikes in this post. Strikes have been in the news recently, …
Sonu Varghese
September 29, 2023
Why The Student Loan Payment Restart Is Not Going to Crash the Economy
We’ve gotten a lot of questions about the potential impact of a government shutdown and the restart of student loan payments in October. Ryan wrote about the government shutdown yesterday, while today I will take a closer look at the student loan payments restarting. The fear is that a sudden resumption of payments will result …
Sonu Varghese
September 27, 2023
Leading Indicator Points to Recession, Ours Says the Opposite
It can be hard to get a handle on all the economic data that is continuously being released, and even worse, they can often send conflicting signals. One approach is to combine several indicators that typically give you an early warning signal about economic turning points into a single indicator, i.e. a “leading economic index” …
Sonu Varghese
September 22, 2023