Graph of the week: Concerns about the US economy

This week’s highly anticipated Fed meeting yielded another no change decision. The Fed decided it was still not the right time to raise its policy rate for the first time since 2006 because of increased concern about the economic outlook. Recent survey indicators show that such concerns are warranted. Screen Shot 2015-09-17 at 16.44.48

Every month, the first indications of business confidence in the US are provided by the regional ISM-indicators for New York (Empire state) and Philadelphia. These have a decent, albeit far from perfect, track record to indicate where overall business confidence in the US is heading in the near term. Both these indicators came in quite weak in September. On top of that, the first indication for consumer confidence in September also showed the lowest number of the past 12 months.

Confidence indicators can be quite fickle, and there are numerous other indicators that still suggest a continuing gradual economic recovery. Still, these weaker numbers are enough to raise valid concerns about the near-term strength of the US economy. In that light, the decision by the Fed to wait for some more confirmation on the recovery was the right one.

This article was written by Bart Van Craeynest

on 18 September, 2015 about Blogs, Financial Markets, US & Canada

On completion of his studies in economics at UFSIA, Bart Van Craeynest started work as an economist in the financial sector. In this capacity he has been following economic developments in Belgium and internationally and the impact of the latter on the financial markets for over 15 years. Following a long period at a large bank, he became chief economist at a Belgian financial institution in 2010. Bart Van Craeynest has held the position of chief economist at Econopolis since 2015. He is co-responsible for the economic line of the house and hence closely involved in developing the investment strategy.