A US recession imminent? Not according to the job statistics

CHART OF THE WEEK

The market downturn as well as disappointing manufacturing sector indicators have led to a multitude of predictions that a US recession is imminent. We are not of this opinion.

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OUR ANALYSIS

We believe that the US economy is in the midst of a manufacturing sector correction stemming from the fall in oil prices and the need to run down undoubtedly high inventory levels. However, aside from the manufacturing sector, we think that growth should remain on the right track: job creation is high and buoying household disposable income. Net of inflation household income is still growing. The construction sector is also healthy and government expenditure, having held the market back for a long time, is now contributing to it slightly.

As for the economic backdrop, we have yet to see an increase in the number of weekly unemployment claims. In our view, this statistic is one of the best indicators of the US economic environment and tends to rise when the economy is heading towards a recession. At the moment, unemployment claims remain at very low levels leading us to believe that US growth is set to continue in 2016.

 

 

 

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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée