According to the median forecasts of multiple econometric estimates from The Capital Spectator, US retail sales are projected to increase by 0.2% in the upcoming January report compared to the previous month. This prediction signals a recovery from December’s decline of 0.9%.
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Recent estimates indicate that the US economy is maintaining its growth trajectory. The Macro-Markets Risk Index (MMRI) closed at +7.9% yesterday (Feb. 10). The consistent readings in the 5%-to-9% range this year suggest that the risk of economic downturn remains low. A reading below 0% would indicate heightened recession risks, while values above 0% point to expected economic expansion in the near future.
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● US job openings reach their highest level since 2001 | MarketWatch
● US Small Business Optimism Declines from 8-Year High in January | 24/7wallst
● US Q4 Growth Estimates Drop After Strong Six-Month Period | WSJ
● Plosser Suggests that the Fed Lacks Understanding of Low U.S. Yields | Reuters
● Greek PM Easily Wins Confidence Vote, EU Faces Showdown | Reuters
Is a change in market leadership occurring? Recent weakness in US utility stocks over the last two trading days has allowed healthcare companies to take the lead in the trailing 252-day (one year) period. At the same time, energy stocks seem to be stabilizing following a significant downturn experienced in previous months.
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● UK Industrial Production Declines in December | RTT
● January Inflation in China Hits Five-Year Low | Reuters
● France’s Industrial Production Rebounds, Up 1.5% | MarketWatch
● Italian Industrial Production Rises 0.4% in December versus 0.1% Forecast | Investing.com
● Conference Board US Employment Trends Index Increased in January | CB
● IMF Predicts India Will Outpace Its BRIC Counterparts in Growth | Globe & Mail
● Oil Prices Decline as IEA Warns of Potential All-Time High in Crude Stocks | Reuters
Current wage increases for US workers, despite the recent surge reported in January’s payrolls data, still suggest an inflation rate below the Federal Reserve’s 2% target. However, analysts are increasingly optimistic that these new employment figures improve the likelihood of the Fed commencing interest rate hikes later this year, potentially as soon as June.
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● Germany Achieves Record High Trade Surplus for 2014 | RTT
● Germany’s Record Surplus Draws Criticism from Economists | Bloomberg
● Now is Not the Time to Increase US Interest Rates | WaPo
● Eurozone Sentiment Sharply Improves in February amid ECB Bond Purchases | Reuters
● China’s Exports Experience Unexpected Decline in January | WSJ
● Prepare for Greece to Depart from the Euro, Warns Greenspan | Telegraph
● Bank of England Set to Issue Its First Deflation Forecast | The Times
● Climate Shock: The Economic Consequences of a Hotter Planet
By Gernot Wagner & Martin L. Weitzman
Summary via publisher (Princeton University Press)
If you had a 10 percent chance of suffering a fatal car accident, you would take the necessary precautions. Similarly, if your finances faced a 10 percent chance of a severe loss, you would reassess your assets. Given that we know our planet is warming with a 10 percent risk of a catastrophe beyond our imagination, why aren’t we doing more about climate change? We insure our lives against uncertain futures—shouldn’t we do the same for our planet?
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In the private sector, the US labor market added 267,000 jobs last month, according to the government’s report, exceeding consensus forecasts significantly. The Labor Department has also revised historical data, revealing stronger growth than previously estimated. Moreover, the latest data indicates an increase in wage growth. Overall, the outlook is quite optimistic, reinforcing the likelihood that the Federal Reserve may start raising interest rates soon, possibly as early as June, based on several forecasts.
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Warren Buffett expresses skepticism, a sentiment echoed by numerous analysts. Sluggish economic activity abroad could potentially delay US interest rate increases. Nevertheless, Cleveland Fed President Loretta Mester argues that the domestic economic trends support a case for raising rates soon. She stated earlier this week that “if incoming economic information aligns with my forecast, I would be comfortable with liftoff in the first half of this year.”
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In summary, the current economic indicators suggest that the US economy is on a promising trajectory, marked by improvements in retail sales, job growth, and stability across major sectors. Moving forward, all eyes will be on the Federal Reserve as it considers potential interest rate adjustments against this backdrop of growth.
