U.S. Goes Slower and Lower
March 8, 2016 | HSBCEstimated reading time: 2 minutes
The US economy’s growth momentum slowed in the fourth quarter of 2015 and could decelerate further this year. However, most of the risks are outside its shores so, despite concerns about a possible recession, we think strong household income growth should support spending and keep the economy growing this year.
Nevertheless, we have cut our forecast for GDP growth in 2016 from 2.3 per cent to 2 per cent following a sharp decline in net exports, a contraction in oil drilling due to lower oil prices, and a slower rate of inventory accumulation.
Despite the slowing growth, US employment jumped by 837,000 jobs in the final quarter of last year. The disparity between GDP and jobs growth creates uncertainty about the economy and about the outlook for the year ahead, but we think the strong increase in employment and real household incomes could signal that the basis for steady growth is still in place.
The decline in net exports, caused by weak economic conditions abroad and the rising dollar, subtracted 0.6 percentage points from US growth in 2015 and we expect a similar drag this year.
The drop in commodity prices, particularly oil, is the other global event affecting the US economy. It has reduced spending by the oil and gas exploration and production industry but the sharp contraction in the energy sector need not pull down the entire economy. The oil sector has gone through severe setbacks before without dragging the US into recession.
Away from the oil sector and related industries, business investment has continued to grow. The question now is whether business confidence will hold up outside of the commodity and export-oriented sectors.
Final demand by domestic purchasers has been relatively strong, household income is growing at a good pace in real terms, and interest rates remain low. These factors should support business investment spending even if declines in global equity markets affect business confidence and access to financing for new investment projects.
With energy prices falling and inflation likely to be low in the first half of 2016, real incomes should continue to grow by 3 per cent to 4 per cent, annualised, strong enough for consumer spending to rise by 2.6 per cent this year.
The continued fall in energy prices has further reduced the outlook for inflation in 2016. We now expect CPI inflation to average just 0.7 per cent this year, down substantially from our previous estimate of 1.5 per cent.
The Federal Reserve is monitoring inflation carefully to determine the timing and size of future interest-rate moves. The further sharp decline in petrol prices and the likely fall in overall inflation until mid-2016 could cause the central bank to postpone its next rate hike until there is clear evidence that inflation has stabilised and has started to move back up.
Suggested Items
Listen Up! The Intricacies of PCB Drilling Detailed in New Podcast Episode
04/25/2024 | I-Connect007In episode 5 of the podcast series, On the Line With: Designing for Reality, Nolan Johnson and Matt Stevenson continue down the manufacturing process, this time focusing on the post-lamination drilling process for PCBs. Matt and Nolan delve into the intricacies of the PCB drilling process, highlighting the importance of hole quality, drill parameters, and design optimization to ensure smooth manufacturing. The conversation covers topics such as drill bit sizes, aspect ratios, vias, challenges in drilling, and ways to enhance efficiency in the drilling department.
The Pulse: Drilling Down on Documentation
04/18/2024 | Martyn Gaudion -- Column: The PulseHow did a product aimed at signal integrity end up being more about documentation? For a little backstory, the Polar team has an unspoken “no business speak” rule at certain times. So, why is this column titled “Drilling Down?” I find it fascinating when a company sets off in one direction, but customers steer it in another. That’s what has happened here as customers took a product down a fork in the road we couldn’t predict. Your destination isn’t always where you initially set off to go, and that’s how we got to our subject of drills and drill documentation.
MKS Introduces ESI Geode G2 CO2 Laser System for High- Precision and High-Speed HDI and mSap Via Drilling
04/09/2024 | MKS Instruments, Inc.MKS Instruments, Inc., a global provider of technologies that transform our world, today announced the official launch of the ESI Geode™ G2 laser drill system, the next generation of the Geode™ platform for processing PCB and ICP materials.
MKS Instruments Receives 2023 Outstanding Service Award from MFLEX
02/29/2024 | MKS Instruments, Inc.MKS Instruments, Inc., a global provider of technologies that transform our world, recently received the 2023 Outstanding Service Award from MFLEX, a global leader in flexible printed circuit board manufacturing and assembly. The award recognizes MKS for outstanding customer support and system service in high-production manufacturing environments.
Schmoll: Pushing Drilling Forward
10/03/2023 | Nolan Johnson, PCB007 MagazineAutomation is everywhere, and nowhere is that more evident than the machines from Schmoll used in the new captive facility for Schweitzer Engineering Laboratories. Schmoll Maschinen GmbH Executive Director Stephan Kunz, and Evan Howard, service manager for Schmoll products, Burkle North America, discuss how their machines are perfectly suited for SEL’s production lines.