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Han De Jong, Chief Economist at ABN AMRO, points out that the US economic data was firm in recent days which suggests a robust economic growth is underway.

Key Quotes

“Business confidence among SMEs, measured by the NFIB index moved higher to a new record for this cycle. The Empire State business confidence index moved up from 22.6 in July to 25.6 in August. That means it is essentially holding on to the high levels seen in recent months. The Philly Fed index was the odd one out, falling to 11.9 in August, from 25.7. I am not sure what that means. Most likely it is largely noise.”

“The harder data on retail sales and industrial production were strong. Retail sales advanced 0.5% mom in July. Excluding cars, the advance was 0.6%. The yoy numbers are impressive. Total retail sales were up 6.4% yoy, and excluding cars, yoy growth amounted to 7.3%. Bear in mind this is nominal. Prices are part of this. Higher oil prices can have a big impact. Americans spent 21.6% more than a year earlier in ‘gasoline stations’.”

“Industrial production grew 0.1% mom in July, after a 1.0% rise in June. Manufacturing output alone was up 0.3% mom, after 0.8%. The annual growth rate has now moved above 4% and has overtaken the eurozone.”

“Problems for mortgage holders eased again in Q2. The number of mortgages registered as ‘delinquent’ fell to 4.36%, down from 4.63% in Q1. Following the financial crisis, delinquencies exploded and reached a peak of over 10% in 2010 (The long-term average is 5.33%).”

“A steady decline followed due to the economic recovery but a rise occurred last year. Fortunately, that rise has now been almost entirely reversed. Foreclosures are following a similar development, expect they did not bounce up in 2017. The share of mortgage loans where the house is being foreclosed is 1.05%, lower than the historic average of 1.51% and, obviously much lower than the peak of 4.64% during the toughest times.”