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Real-time data show economy's rebound slowing but still going

Dion Rabouin, author of Markets
Data: New York Fed; Chart: Axios Visuals

The New York Fed's index of real-time data reversed again in the last week, with data continuing to show a slow but recovering economy that is having trouble returning to its pre-pandemic strength.

What happened: The index was unexpectedly weaker given solid data on U.S. retail sales and the massive outperformance of the Conference Board's consumer confidence index.

  • The index had ticked up to -3.84% last week, and the latest decline for the week of Sept. 26 comes "in spite of increases in retail sales, steel production, and consumer confidence," the index's authors say.
  • The index was at -4.5% after its previous update on Thursday.

What it is: "The Weekly Economic Index is an index of 10 daily and weekly indicators of real economic activity, scaled to align with the four-quarter GDP growth rate," per the New York Fed.

The big picture: Other real-time data backs the stall out in the New York Fed's data.

  • TD Securities analysts note that the daily Homebase employment series now shows a small decline in not-seasonally-adjusted private payrolls in September and points to a decline in jobs for October.
  • The OpenTable restaurant series "has been volatile, but it appears to be trending up slowly," they note.
  • The analysts expect a positive jobs number in the September jobs report, but only 400,000 jobs added, which would be less than half the consensus expectation of 850,000, according to FactSet.

A similar measure of real-time data from Jefferies rose in the last week, but remains below its September peak, as the month-over-month growth rate "has averaged at just 1.5% over the past month, the slowest pace since the beginning of the recovery."

  • Though analysts caution the September slowdown is likely based on seasonal factors, "i.e., not yet a concern."

Go deeper

Courtenay Brown
23 hours ago - Economy & Business

Consumers are planning to cut back on travel spending for the holidays

Reproduced from the Conference Board, Nielsen; Chart: Axios Visuals

Consumers are planning to pare back the most spending on vacations and travel during the holiday season — another possible concern for the services sector, according to a survey by the Conference Board and Nielsen provided first to Axios.

The big picture: Overall, consumer spending this holiday season is expected to be roughly in line with last year, the Conference Board estimates.

Go deeper (1 min. read)Arrow
Courtenay Brown, Felix Salmon
Updated Oct 29, 2020 - Economy & Business

U.S. economy sees record growth in third quarter

The U.S. economy grew at a 33.1% annualized pace in the third quarter, the Commerce Department said on Thursday.

The state of play: The record growth follows easing of the coronavirus-driven lockdowns that pushed the economy to the worst-ever contraction — but GDP still remains well below its pre-pandemic level.

Go deeper (2 min. read)Arrow
Felix Salmon, author of Capital
Updated Oct 29, 2020 - Economy & Business

How central banks can save the world

Illustration: Aïda Amer/Axios

The trillion-dollar gap between actual GDP and potential GDP is a gap made up of misery, unemployment, and unfulfilled promise. It's also a gap that can be eradicated — if central banks embrace unconventional monetary policy.

  • That's the message from Eric Lonergan and Megan Greene, two economists who reject the idea that central banks have hit a "lower bound" on interest rates. In fact, they reject the idea that "interest rates" are a singular thing at all, and they fullthroatedly reject the idea — most recently put forward by New York Fed president Bill Dudley — that the Fed is "out of firepower."

Why it matters: If Lonergan and Greene are right, then central banks have effectively unlimited ammunition in their fight to increase inflation and employment. They are limited only by political will.

Go deeper (1 min. read)Arrow