From a small northwestern observatory…

Finance and economics generally focused on real estate

Phily Fed Survey: More of the Same

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The quarterly survey of forecasters, produced by the Philadelphia FED, is one of my regular touchstones for where the economy is headed.  One caveat — in “steady” times, they tend to be pretty accurate.  They miss black swan events, but so do everyone.

That said, they are look at annualized GDP growth of about 3% in the coming quarter and about 2.6% in the following quarter.  Job growth will decline into 2019, adding about 195,000 jobs per month this year, declining to about 165,000 next year.  However, unemployment will remain pretty much where it is.  Inflation continues to be a non-event.  These numbers pretty much make sense, if you consider there is a pretty strong tail wind.  We’ve been on a positive trend since about 2010, and in the absense of systemic shocks to the system, why worry?

I’ve noted in the past that this group of forecasters tend to be fairly… ahhh, I hate to use the word lazy, but what the heck.  They mostly work for banks and such, and so have a bit of a bias in favor of good times ahead.  That’s one of the reasons they tend to miss negative signals.  I’ve noted here in past posts that the yield curve is approaching a dangerous inverted shape (for the uninitiated, this isn’t just reading tea leaves — it tells us a lot about the expectations of borrowers and lenders).  The trade war only gets worse, and we’re seeing increasing disruptions in agriculture and manufacturing here in the U.S. as a result.  I’m not trying to be Chicken Little, but this is certainly influencing my thinking.

Written by johnkilpatrick

August 12, 2018 at 10:44 am

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