us economy

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US economy likely to stay buoyant despite corrections

Guest post by Jean-Sylvain Perrig, UPB Chief Investment Officer | The US economy is back on track. Its second-quarter bounce was sharper than previously thought and it is expected to stay on a reasonably good path of 3% in the coming quarters, thanks notably to a rebound in capex, a falling unemployment rate and a sharp improvement in the real estate sector. That will further boost consumer confidence, which has already reached its highest level in seven years.

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“We’ll see zero credit growth in the Monetary Union in the next 2 years”

WASHINGTON | By Pablo Pardo | Mark Zandi is chief economist at Moody’s Analytics, the department in charge of consulting, advising and providing services for businesses and financial institutions. Among its many activities, the firm advices several European banks with regard to the EBA’s and ECB’s stress tests. Moody’s created this department in 2007, after buying –Zandi’s analysis company.

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Labour market as a guide to the monetary policy

MADRID | By Luis Arroyo | Experts at Afi made an analysis of the US’ labour market to forecast a possible turn in the economic policy. The answer is that such market is yet far from standardization. We can see three different moments according to the standard deviation in the chart above.

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Let’s hope Alan Krueger is wrong and Janet Yellen right

WASHINGTON | By Pablo Pardo | Maybe central banks and market participants are giving too much weight to the unemployment rate when trying to gauge future inflation. Instead, they should look at the short-term unemployment rate, because the long-term unemployed risk becoming economic pariahs. 

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IMF’s warning to the FED

MADRID | By The Corner | The International Monetary Fund (IMF) revised downwards its growth forecasts for the US from 2.8% in April 2014 to 2%, and maintained 2015 outlook in 3%. Furthermore, the institution believes that the country will not achieve full employment before 2017.

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Stronger US wage growth should underpin firming inflation backdrop

LONDON | By Michael Gapen at Barclays | Persistent improvement in US labor markets has caused the Fed to continue tapering and to alter its quantitative policy rate guidance in favor of qualitative language indicating that the committee is prepared to maintain the current target rate for the federal funds rate for “a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.”

Inflation: the “target” has become a “barrier”

SAO PAULO | By Marcus Nunes via Historinhas | The Fed’s (and central banks in general) preferred tactic is “wait-and-see”, usually expressed in the form of “we will monitor closely”! Instead of becoming a focal point for the coordination of expectations, inflation has become a barrier to getting the economy’s recovery back on track.