U.S. Outlook: A Fed rate cut is still needed

Scott Anderson
Chief Economist

Despite positive readings on some major U.S. economic indicators in June and July, red flags surrounding future growth continue to appear. For example, this week the Conference Board’s Leading Economic Index clearly pointed to softer U.S. economic activity ahead. In June, this index dropped the most in one month since January 2016, which was the last time the U.S. economy was struggling to grow and business investment was in a technical recession. Moreover, the outlook on global manufacturing and economic growth continues to darken.

Since monetary policy works with a lag of about six months to a year in the best of times, the Federal Reserve needs to look beyond the next month or two and try to divine where the economy could be a year from now without any additional monetary support.

We think the choice is clear, now is the time for the FOMC to cut rates, if there is any chance to stave off a sharp slowdown or outright recession next year.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on July 19.

Key observations:

* Some U.S. economic data reports in June and July, such as regional manufacturing surveys and employment readings, have painted a picture of a stable expansion.

* However, there are red flags. The Conference Board’s Leading Economic Index pointed to softer U.S. economic activity ahead.

* Outside of the U.S., signs of slower growth continue.

* The FOMC should anticipate a slowdown on the horizon by cutting rates in July.

Read my full report.

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Investment Insights: Mr. 3000

Wade Balliet
Posted by Wade Balliet
Investment Strategy

The U.S. stock market reached a few more milestones at the end of last week. For the first time ever, the S&P 500 closed above the 3,000 level and the Dow Jones Industrial Average closed above 27,000 after dovish comments from the Federal Reserve lifted prices higher.

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Investment Insights: Lackluster trade fireworks

Wade Balliet
Posted by Wade Balliet
Investment Strategy

After all the excitement surrounding the trade meeting between U.S. President Donald Trump and Chinese President Xi Jinping over the weekend, the outcome seems to have fallen flat for investors.

On Friday, ahead of the summit, the S&P 500 leapt higher before paring gains on Monday as investors realized no long-term solution had been reached. However, some positives did result from the conversation between the two heads of state.

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California Economic Outlook: Blowback

Scott Anderson
Chief Economist
port-of-long-beach-cranes

The trade war between the U.S. and China has negative implications for California.

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The Double Bottom Line on Tiny Homes: Smaller (carbon) footprint, bigger bang for the buck?

Newsroom
Posted by Newsroom
Corporate News

Tiny houses have hit the big time, especially among younger homebuyers. In fact, more than half of Americans would consider living in a home that’s less than 600 square feet, according to a 2017 study from the National Association of Home Builders.

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