US: Solid economy but some signs of weakness emerging – ABN AMRO
Han de Jong, chief economist at ABN AMRO, suggests that even though the US is the strongest growing economy of the key countries, but its growth has past its peak.
“That peak was in Q2 when growth was 4.2% qoq annualised. The trend growth rate for the US is probably just below 2%, so growth has exceeded its long-term potential for a while and a return to potential should be expected. Nothing wrong with that. Interest rate sensitive sectors have shown some weakness in the last couple of months, in particular housing.”
“The most recent data on housing starts, building permits and existing home sales were all positive, though. On the negative side, the NAHB index, which measures confidence of home builders, fell from 60 in November to 56 in December, the second, material drop in a row. The first regional business confidence indices in the US, the Empire State index and the Philly Fed index both declined in December.”
“The Empire State fell from 23.3 to 10.9 and the Philly Fed index fell to 9.4 from 12.9, while it had fallen more strongly in November. The commentary accompanying both releases pointed out that these headlines are weaker than the detailed data would justify.”