US Recession – In a week in which Albert Edwards of Société Générale warned that the US economy is about to collapse into a recession and the August jobs reported showed the number of jobs created in the US slowed significantly last month, Deutsche Bank’s analysts are claiming that there’s no recession in sight for the US economy.
- Edwards: The US economy is already in recession and about to collapse
- Wage growth is stronger than headline figures suggest
- Time To Worry About Rising Consumer Debt?
- Corporate Defaults Set To Hit Post 2009 High
- US Consumer Defaults Are On The Rise
According to a report put together by Torsten Slok, Ph.D. Chief International Economist for Deutsche Bank earlier this week, the US economy continues to expand despite deteriorating headline figures. Here are some of the reasons why Torsten Slok believes this is the case.
US Recession – not coming says Deutsche Bank
The US misery index is an economic indicator created by economist Arthur Okun and currently at one of the lowest levels this century. The index’s components are the unemployment rate added to the inflation rate and as shown in the chart below, the index sits at a little above 5%, the lowest level since the late 50’s.
With economic misery levels near record levels, home sales are accelerating — a sign of stronger
consumer confidence and easier access to credit. The number of new single family houses sold is returning to pre-crisis levels and the sales of homes between $200k and $300k accelerating.
One of the key themes that has caused analysts to claim that the US is heading for a recession is the declining corporate capex spend. However, Deutsche believes capex spending accelerated going into the second half.
Industrial production surveys also point to capex growth.
Consensus estimates for US GDP growth predict steady growth of around 2.2% per quarter till the end of 2017.
Banks are also lending more. Weekly data for bank lending continues to grow at 8% year-on-year. Meanwhile, the average time taken to fill a vacant job slot has increased from 23 days in 2006 to 27 days today indicating tightness in the labor market. The number of available people per job opening is now below 2006/2007 levels.
The number of job openings per hire is trending higher with no sign of slowing down implying that those who have left the labor force during the past few years may start to return.
Wages are already rising for both men and women. According to the Atlanta Fed wage growth tracker, wage growth is trending close to pre-crisis levels.
Wage growth for the job switcher is already back at pre-crisis levels and wage growth is being reported across all income levels.