Japanese QE still isn’t working

Japanese monetary trends continue to suggest remarkably little impact from the country’s QE experiment. Annual growth of broad money M3 stood at 2.1% when the Bank of Japan (BoJ) launched QE in October 2010; it was 2.5% in March 2013, … Read More

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UK Inflation Report confirms hawkish shift since May

Markets have interpreted the August Inflation Report as signalling further delay in monetary policy normalisation. Bank of England Governor Mark Carney’s press conference remarks admittedly gave little encouragement to those expecting the first rise in Bank rate to occur this … Read More

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Chinese industrial pick-up confirmed; money numbers mixed

Chinese economic momentum has strengthened as predicted by monetary trends and business surveys. Six-month industrial output growth rose to 4.4% in July, or 9.1% annualised, the highest since December. A further increase is likely, based on new orders readings in … Read More

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Global leading indicator slightly weaker but still positive

The global longer leading indicator followed here suggests that economic growth will strengthen through the current quarter before stabilising / moderating later in 2014. This is consistent with recent narrow money trends. The longer leading indicator is derived from OECD … Read More

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Cycle analysis suggests 2016-17 US recession risk

A post last week suggested that economic fluctuations in recent decades can be explained by the interaction of three cycles. The current post applies this idea to post-WW2 US economic data. The three cycles of interest are: the 3-5 year … Read More

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UK deposit rate fall boosting banks / economy

The average interest rate on the stock of UK bank lending to households rose marginally from 3.91% in May to 3.93% in June, while the average rate on household deposits eased from 1.19% to 1.15%* – see first chart. The … Read More

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Global money trends still positive

Six-month growth of global* real narrow money – the key forecasting indicator followed here – remained solid in June, suggesting respectable economic prospects through end-2014. Real narrow money growth bottomed in November 2013, rising significantly through February / March 2014. … Read More

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Time and cycles

Time-based economic forecasting is unfashionable. Until the mid-twentieth century, economists were sympathetic to the idea that business activity and prices fluctuate in regular cycles. The majority view today is that booms / busts reflect policy errors, market failures or supply-side … Read More

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UK growth should stay strong in H2

“Forecasters’ droop” is the tendency of economists to predict that a stronger-than-expected data series will fall back to “trend”, despite a lack of catalysts for such a development. The MPC appears to have contracted the disease, judging from the expectation … Read More

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Will the UK become a high tax economy?

UK whole-economy output has surpassed its level in the 2007-08 financial year yet the budget deficit remains huge – a projected 5.5% of GDP on an underlying basis* in 2014-15, according to the Office for Budget Responsibility (OBR), compared with … Read More

Posted in Tax, UK economy | 1 Comment
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