Archive

April 30, 2025
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EA: GDP Stimulated Faster Than Supply

  • Activity growth in Q1 shouldn’t be dismissed as it helps signal the economy’s momentum and effective monetary conditions that trade shocks will fall on top of in the euro area.
  • GDP growth exceeded expectations again by increasing to 0.35% q-o-q. Productivity’s poor post-pandemic performance helps GDP drive the ongoing fall in unemployment.
  • Supply’s trend seems to have softened despite demand’s improving, raising excesses and the risk that ECB monetary policy was already stimulative before the trade shock.

By Philip Rush

April 29, 2025
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EA: Easing Stagflationary Noise

  • Hard economic data must match gloomy sentiment to justify ECB rate cuts reaching a stimulative setting. The little evidence available so far doesn’t show much of a shock.
  • Bank lending growth kept rising for companies and households in March as monetary conditions appear to be loosening, not tightening, due to the initial tariff shock.
  • Activity surveys only softened slightly in services, while inflation expectations are broadly high. Failure to see much more stagflation eases the likelihood that it occurs.

By Philip Rush

April 24, 2025
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DOGE Didn’t Dent Resilience

  • President Trump is restructuring the US state through tariff funding and efficiency savings. The former dominates focus, but we also see no evidence of problematic cuts.
  • Jobless claims are low and stable, including among federal workers and in states with the highest federal workforce shares. Government job openings haven’t even fallen.
  • DOGE cuts are often multi-year and in grants to others. It may have helped the deficit, and the efficiency is fundamentally desirable. Concerns about it still seem overblown.

By Philip Rush

April 23, 2025
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Global Manufacturers Shrug Off Tariffs

  • Volatile and destructive US trade policy has roiled markets and confidence, but April's flash PMI data suggests the sector isn’t suffering significantly more than before.
  • The average held steady while the US balance increased. Weakness concentrated in the UK, where experience of the past decade suggests it is more distorted by bad vibes.
  • Unemployment data are a more reliable signal, albeit lagging, and these also remain remarkably resilient. Rate cuts rely on Trump breaking the economy, but lack evidence.

By Philip Rush

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