Daily update
Daily update
- In the US today, a non-economist will attempt to explain to a collection of non-economists the extraordinary complexity of an economy undergoing dramatic structural change. The questioning will be mainly partisan point scoring. The question Fed Chair Powell needs to be asked is “what do you think you are doing?”. Powell has yet to explain how raising rates will tackle profit-led inflation. Pursuing higher unemployment seems an ineffective response.
- It seems that demand for goods in developed economies is still quite weak. Chinese export data for January fell (again). As China is the world’s largest assembler of manufactured products, that matters as a signal.
- Other consumer demand signals come with US consumer credit data. This is complicated. After nearly two years of catastrophically negative real wages, US consumers have become increasingly dependent on credit to prop up their living standards. However, there are signs (especially for lower income groups) that accessing credit is becoming harder. UK BRC retail sales data showed another real decline, reflecting weaker spending power and changing consumer spending patterns (pubs prioritized over store purchases, etc.)
- January German factory orders data rose, and of course the previous month’s data was revised stronger (as is the norm with German economic numbers). The consensus range of forecasts was ludicrously wide.
