Torsten Sløk, chief international economist at Deutsche Bank, is still bullish.
Sløk argued in an email that “Spring has arrived” in the US economy.
And look, the idea that “winter is coming” to anything — be it the economy, politics, the NFL, or Westeros and so on — is very much a tired cliche at this point, we’ll allow it here.
The actual thing to note in Sløk’s view is that he’s arguing the Federal Reserve should raise rates at its next meeting.
That the Fed would move in March has long been seen as highly unlikely, with current pricing giving just a 10% to Fed action in two weeks.
But as inflation has picked up, employment has remained strong, and the case the Fed has met its two goals of full employment and 2% inflation gets stronger and stronger, we’ll be interested to see how the narrative around the Fed shifts in the coming weeks and months.
Here’s Sløk on the actual things that are happening in the US economy and why that is good:
Today we got more confirmation that the negative effects of dollar appreciation on the US economy are starting to fade, see the first chart below. Specifically, we have in recent months seen a solid turnaround in the employment data for the manufacturing sector and in the manufacturing ISM. Combined with the acceleration we are seeing in consumer spending and inflation I would argue that if the Fed is truly data dependent then they should be raising rates at their next meeting, see also the second and third chart.
Here we go.