Economists look for leading indicators to rebound after storms
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The Conference Board’s Leading Economic Index (LEI) report for October is expected to rebound from a 0.2 percent decline the previous month. That drop—the first in a year—resulted in part from weak employment and residential construction activity tied to Hurricanes Harvey and Irma, according to the Conference Board. (LEI is compiled from ten economic indicators—including first-time unemployment claims, factory orders, building permits, stock prices and interest-rate spreads.)
“With hurricanes, the capital markets tend to give a little bit of a ‘hall-pass’ for events like that,” said Eric Freedman at U.S. Bank Wealth Management in Minneapolis, Minnesota. He said that going forward, the economy looks much better, partly because the U.S.’s major trading partners are on a roll.
“For the first time since the financial crisis in ’08-’09, we’ve actually seen synchronized global recovery really kick in — in Japan, Europe, China, the U.S., Canada, and Latin America,” he said.
In the U.S., job creation, and consumer and business confidence have been “rather elevated,” said Chris Christopher at IHS Markit. And he said higher-income Americans have seen their wealth rise strongly, along with equity markets.
“Due to a stronger stock market,” he said, “luxury sales might do pretty well.” This year, IHS Markit predicts that holiday retail sales will rise 4.2 percent over 2016.
Tax changes that Republicans in Congress are trying to pass before year’s end—including lower taxes on businesses—could increase economic growth modestly next year, said Christopher.
And that, in fact, has been the hope of middle-market business owners surveyed by consulting firm RSM over the past year, since the November 2016 election, said RSM Chief Economist Joseph Brusuelas.
“They’ve had a general expectation — even an outsize expectation — of rising revenues over the horizon,” said Brusuelas. “They wanted to see health care reform, tax reform, and they also wanted to see infrastructure spending.”
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|U.S. hiring jumps after hurricanes as employers add 261,000|
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