One, two, three, four and five: five sets of data on the US economy, the worst was pointed to strong recovery in the US, the best pointed to the fastest growth rate in nine years.
Let's start with the best. The latest US Consumer Confidence Index from the Conference Board, a closely watched index and often seen as a good guide to the underlying strength of the US economy, leaped, like a stallion surging over a high fence, hitting 107.1, from 100.8, the month before. Okay, that number may not mean much, but the point is that this reading was a nine-year high - the highest score since the days when the suggestion that the US economy was set to suffer its deepest recession since the 1930s would have been greeted with incredulity. By the way, in the US, consumer confidence often seems correlated with equity performance, unlike the UK, where house prices may be more important. When you consider that US stock markets have been passing new highs with such regularity that it is no longer news when it happens, the jump in consumer confidence may not be so surprising.
Then there is US jobs, the unemployment rate fell to a nine-year low. Employment, or non-farm payrolls, which is the US measure economists like to watch, rose by 178,000 in November, that's pretty good, but the wider point is that in the first eleven months of this year, non-farm payrolls have risen by a smidgeon less than two million. The number of involuntary part-time workers reduced by 220,000 to just 3.6%, the lowest level so far during this cycle. The fall in unemployment occurred despite the workforce increasing in size by 1.7 million this year, although it did drop a little month on month in November. The one negative relates to wages, average hourly wages fell by 0.1%, but with higher paid jobs in business and professional services rising by 63,000 in November, the fall in wages was surely a one-off.
And this takes us to the latest purchasing managers indexes, (PMIs) from ISM. November saw two. And they both rose. The non-manufacturing index, for example, rose to a 13-month high, jumping like a filly to 57.2, from 54.8 the month before. A sub-index tracking employment leaped even higher. As Capital Economics put it: "The surge in the employment index to 58.2, from 53.1, left it consistent, on past form, with monthly gains in private services payrolls of almost 300,000. " The manufacturing PMI increased to a five-month high.
Combine the two PMIs, and they point to growth of 3% annualised, in the final quarter of this year in the US.
And finally data covering the US economy in Q3 has been revised upwards, and now records growth of 3.2% annualised from 2.9% estimated previously. But the good news does not end there. An alternative measure of the US economy: GDI, gross domestic income, rose by 5.2%. In theory GDI should equal GDP, so that jump was encouraging. It was helpded by a 6.6% rise in corporate profits (annualised.)
So all this augers well, with Capital Economics predicting 2.7% growth next year.
Some might react to the recent US election result as a kick in the teeth for liberal values, but right now the US economy is no donkey.
PS: GDI equals compensation of employees + gross operating surplus (which is effectively corporate profits) + gross mixed income + taxes – subsidies on production and imports. GDP equals consumption + investment + government spending + exports - imports. In theory the two measures should throw up the same result, the fact they rarely do shows how hit and miss estimates of the economy are.
