Surprise! The Economy Is Looking Pretty Good Right Now

US economyMy Comments: Is it OK to be cynical from time to time? I hope so.

The primary message that came out of the Trump campaign for the White House was that no one in Washington gave a damn about the working poor of America. That a large group of Americans had been left behind and that it was time to ‘drain the swamp’.

I agree that from time to time it is necessary to ‘drain the swamp’, or more accurately re-assess the assumptions that put us where we are today. However, nothing I’ve seen or heard so far suggests there will be any attempt to resolve the economic tensions that exist between rural and urban populations, between the educated and less educated, between black, white and hispanic Americans.

The folks being appointed to key positions have zero inclination to help those on the lower end of the economic spectrum rise, and by extension, expand the middle class. There is every indication that economic disparity will increase, largely because those on the low end are easily persuaded that opportunities for success are just around the corner.

I voted for Hillary despite her lack of charm. For me, the existential threat posed by increased economic disparity coupled with the erosion of democratic values, is far greater than the threat posed by possible corruption in the lives of Democratic Party leaders. Do you seriously believe there is no corruption within the Republican Party leaders?

By Ben Eisen | Dec 13, 2016

The Federal Reserve is likely to be pretty happy with the recent slew of data as it assesses the economic outlook this week.

The Citigroup Economic Surprise index, which measures how closely data match up to forecasts, has been climbing recently. The U.S. index had a reading of 32.6 on Tuesday, close to its 2016 high of 43.1 from the end of July. Before that, one has to go back to 2014 to find a higher reading.

The higher the reading, the bigger the margin by which data are beating expectations. When the index turns negative, it means the numbers are missing expectations. After a prolonged period below zero for much of 2015 and 2016, the U.S. index has popped higher.

And it’s not just in the U.S. where data are getting stronger. The euro-area version of the index was at 66.1 on Dec. 6, the highest since early 2013. It had a reading of 59 on Tuesday. The global index had a reading of 24.5 on Dec. 6, its highest since early 2014, and was near that level on Tuesday.

Fed officials have often-times stated that they are data dependent, with slow economic growth and low inflation causing them to lift rates at a more leisurely pace than they might otherwise. But forecast-beating readings on gross-domestic product growth, consumer confidence, manufacturing, the labor market, and other big data releases have all boosted the U.S. index in recent weeks.

Stronger data outside the U.S. is also likely to help boost the Fed’s outlook, since the central bank has at times said in past statements that it is monitoring “international developments.”

Additionally, stronger data is likely to help support the jubilant market tone that’s pushed major U.S. stock indexes to record highs. Many investors are betting on quicker growth and higher inflation when President Donald Trump takes office. The data are one sign it’s already here.

One group of indexes, of course, doesn’t capture everything going on with the global economy. Surprise indexes tend to be both a reflection of the data and of expectations, meaning weak data can pull down forecasts and make it easier for those numbers to top expectations.

But it’s one way of showing that the economy has been doing well recently, giving the Fed more room to lift rates on Wednesday, and a signal a faster pace of increases next year.