By John Eckstein, Astor Investment Management
Our proprietary Astor Economic Index® is still showing strong growth in the US economy. The index is currently in the middle of a fairly narrow range it has been in during 2018. The economy has thus far proved itself resilient to escalating trade tensions.
Various of the regional federal reserve banks produce nowcasting estimates as an exercise in real-time understanding of the economy. While the New York fed’s nowcasting estimate of 2.2% Q3 growth is only modestly above potential growth, both the Atlanta and St. Louis models are showing Q3 growth with between 4 – 4.5% annualized.
The labor market continues to impress with jobs added at a faster pace than is required to keep up with the natural growth of the labor force.
The good news has spread to fatter pay packets for workers in recent months. For example, the year over year change in average hourly earnings set a high for the recovery in September, catching up with another measure of wages from the from the National Compensation Survey. Of course, this is coming at a time when inflation has increased so not all of that is a real gain for workers. I would like to see wages further outstrip inflation to give the consumer some optimism.