Stabilizing politics and stabilizing weather should stabilize growth

Posted by: Paul Donovan

07 Mar 2019
  • The US Federal Reserve's gossip sheet for economists (the Beige Book) signalled the US economy was OK. Manufacturing was improving and the labor market remains strong. However, bad weather and bad politics (the government shutdown) exerted a drag on economic activity. Overall, the report is consistent with an economy that should stabilize once politics and the weather stabilize.
  • Fed President Williams was reiterating patience while this stabilization process takes place. One critical issue for the Fed to watch is whether rising wage costs pressure inflation or pressure profit margins. The Beige Book seemed to imply that profit margins could be feeling more of the effects. US unit labor costs are due today.
  • The ECB meets with low expectations for any policy changes. New forecasts are published. These are about as accurate as anyone else's Eurozone economic forecasts, but the media tends to treat central bank projections with a special and undeserved sort of reverence.
  • In the interminably tedious process of the EU-UK divorce, nothing of interest is happening. Unnamed EU officials are suggesting nothing will be offered to the UK because there is nothing that can be offered that will change the votes of the UK Parliament next week.

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