June 2017 The Comerica US Economic Outlook Reflation T he Swerve Reflexivity and The Budget 2 Definitions Reflation Noun ID: 1029856
Download Presentation The PPT/PDF document "Robert A. Dye Ph.D. Chief Economist, Co..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
1. Robert A. Dye Ph.D. Chief Economist, Comerica BankJune 2017 The Comerica U.S. Economic Outlook Reflation, The Swerve, Reflexivity and The Budget
2. 2 Definitions ReflationNoun 1. An increase in economic activity and prices 2. An increase in the supply of money and credit designed to cause such an increaseSwerveVerb Change or cause to change direction abruptlyNoun An abrupt change of direction. ReflexivityNoun A circular relationship between cause and effect, with the cause and the effect affecting one another in a relationship in which neither can be assigned as causes or effects.
3. 3 The Diagram Global ReflationU.S., China, India, JapanEurope, Commodity CountriesGlobal Money SurgeThe Trump SwerveExpectation of:DeregulationBusiness Friendly EnvironmentTax CutsInfrastructure SpendingHealthcare PolicyReflexivityAuto Sector DollarStocksOilFed Monetary PolicyFed Budget ConstraintsInventoriesBus. Investment Defense SpendingHousingConsumerOther Government TradeThe Outlook
4. 4U.S. Reflation Metrics Positively Correlated 2016H2-17Q1 Sources: BEA, BLS, Federal Reserve, CRB, S&P M2 pchya, (R) S&P 500 pchya (L) GDP pchya (R) CPI pchya (R) Credit % (L) Commodities pchya (L)
5. 5GDP Forecast: Ongoing Moderate Expansion, Weighing the Trump BumpHistoryForecastSources: BEA, Comerica Bank 2.6 1.6 2.3 2.7
6. 6Labor Metrics Remain Solid Payroll Employment, avg monthly diff, ths (L)Unemployment Rate, percent (R)Sources: BLS, Comerica Bank
7. 7More Upward Pressure on Wages to ComeUnemployment Rate Average Hourly Earnings, percent change year agoSource: BLS
8. 8Moderating Oil Prices Means Less Inflation Ahead Consumer Price Index, pchya (L)WTI oil price, pchya (R)Sources: BLS, EIA
9. 9Interest Rate Outlook, Moderate Increases Through 2018 Fed Funds10-Year Treasury BondSources: Federal Reserve, Comerica Bank30-Year FRM
10. 102017 Forecast…The 360 ViewDownside RisksFailure of the Trump AgendaStock market correctionGlobal volatility, China, Japan, Eurozone/Brexit, Russia, MENAHigher interest rates Housing stallsPushback from trade agreementsStrong dollar/weak tradeTerrorist event Consumer spending slumpsUpside RisksTax reform, personal and corporateInfrastructure program Consumer/business confidenceBusiness investment Wealth effectsDeregulation, including financialExpansive energy policy w/higher pricesSingle-family housing market Job growth stays strongSecond leg for autos
11. 11Mind the Gap
12. 12A Dire Prediction by the CBOSource: Congressional Budget Office
13. Robert A. Dye, Chief EconomistSubscribewww.comerica.com/economicsFollow on Twitter@Comerica_Econ