The Weekly Strategy Report (01 February 2016)Contributor Multi-Asset Solutions
- Recent developments have called into question our upbeat view on the U.S. economy; markets are much less optimistic.
- Two developments since late 2015 carry potential implications for the outlook. Growth lost momentum in the fourth quarter of last year, and the market sell-off has itself tightened financial conditions.
- We are downplaying the GDP growth swoon, regarding it as temporary, and take some comfort from continued strength in employment, consumer confidence and bank lending, while we are closely watching the upward drift in jobless claims.
- Tighter financial conditions will represent a drag on growth, but likely a manageable one, especially because the dollar has not continued its sharp appreciation.
Exhibit 1: U.S. payrool employment and real GDP
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