Our proprietary Astor Economic Index® is still showing strong growth in the US economy. The index is currently in the middle of a fairly narrow range it has been in during 2018. The economy has thus far proved itself resilient to escalating trade tensions.
Various of the regional federal reserve banks produce nowcasting estimates as an exercise in real-time understanding of the economy. While the New York fed’s nowcasting estimate of 2.2% Q3 growth is only modestly above potential growth, both the Atlanta and St. Louis models are showing Q3 growth with between 4 – 4.5% annualized.
The labor market continues to impress with jobs added at a faster pace than is required to keep up with the natural growth of the labor force.
The good news has spread to fatter pay packets for workers in recent months. For example, the year over year change in average hourly earnings set a high for the recovery in September, catching up with another measure of wages from the from the National Compensation Survey. Of course, this is coming at a time when inflation has increased so not all of that is a real gain for workers. I would like to see wages further outstrip inflation to give the consumer some optimism.
As mentioned above, inflation has increased in recent months. The fed’s preferred measure, the core Personal Consumption Expenditures price index is quite close to the 2% the fed sees as its target. As long as the economy continues to show strength, my expectation is that the fed will continue to raise rates to the neutral rate of about 3%, though given the international uncertainty, I also expect their stately pace of a quarter point each calendar quarter will continue.
As always, we at Astor will be monitoring the economy closely to inform our investment decisions. To see more of our weekly collection of charts, visit www.astorim.com/charts or download the new Astor Economic Research App from the App Store or Google Play.
All information contained herein is for informational purposes only. This is not a solicitation to oﬀer investment advice or services in any state where to do so would be unlawful. Analysis and research are provided for informational purposes only, not for trading or investing purposes. All opinions expressed are as of the date of publication and subject to change. Astor and its aﬃliates are not liable for the accuracy, usefulness or availability of any such information or liable for any trading or investing based on such information.
The Astor Economic Index® is a proprietary index created by Astor Investment Management LLC. It represents an aggregation of various economic data points: including output and employment indicators. The Astor Economic Index® is designed to track the varying levels of growth within the U.S. economy by analyzing current trends against historical data. The Astor Economic Index® is not an investable product. When investing, there are multiple factors to consider. The Astor Economic Index® should not be used as the sole determining factor for your investment decisions. The Index is based on retroactive data points and may be subject to hindsight bias. There is no guarantee the Index will produce the same results in the future. The Astor Economic Index® is a tool created and used by Astor. All conclusions are those of Astor and are subject to change.