Graph of the week: Worried about the US economy

The manufacturing sector in the US has been under serious pressure for several months. Worryingly, this weakness now seems to be spreading outside of manufacturing. The probability of the US economy slipping back into recession in the near future has significantly increased in the past two months.

US isms

US manufacturing has been under serious pressure for several months, which is already being reflected in cutbacks in investment spending. Other key parts of the economy like the labour market and the housing market have been holding up rather well. Worryingly, in the past developments in manufacturing were usually leading indications for the rest of the economy.

In recent months business confidence in the services sector has also turned down sharply, which is obviously an important source of concern. For now, these indicators remain above recession-like levels. As such, the most likely scenario is still for the US economy to avoid recession. That said, the probability of the US slipping back into recession in the near future has significantly increased in the past few months.

In any case, the weaker economic data will force the Fed to scale back its rate hiking plans. Until quite recently, the Fed was planning to raise its policy rate by 1% over the course of the year. Markets have already abandoned any expectation of further rate hikes this year.

 



Dit artikel werd geschreven door Bart Van Craeynest

op 5 februari, 2016

Bart Van Craeynest ging na zijn studies economie aan UFSIA aan de slag als econoom in de financiële sector. Hij volgt in deze functie al meer dan 15 jaar de Belgische en de internationale economische ontwikkelingen, en de impact hiervan op de financiële markten. Na een langere passage bij een grootbank werd hij in 2010 hoofdeconoom bij een Belgische financiële instelling. Sinds 2015 vervult Bart Van Craeynest bij Econopolis de rol van hoofdeconoom. Hij is medeverantwoordelijk voor de economische lijn van het huis en nauw betrokken bij het uittekenen van de beleggingsstrategie.

 

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