Article / 23 January 2014 at 14:58 GMT

US economy says goodbye to 2013 in fine fettle

• December jobs data was blip, US set fair for 3% growth in 2014
• Chicago Fed index indicates recovery gathering pace
• US Fed likely to continue with tapering at next week's meeting

By Mads Koefoed

Bottom line: The employment report for December may have been dismal, but overall data for the final month of 2013 paints a picture of an economy growing above trend. I expect this momentum to be carried into this year where economic growth could reach a near decade-high of 3 percent.

US GDP vs. Chicago Fed National Activity Index

Details: The world's largest economy recorded another strong month in December with the Chicago Fed's National Activity Index (CFNAI*) printing 0.16. This was quite a big disappointment compared to the consensus expectation of 0.9* and came on the back of 0.69 in November, which was the strongest print in 12 months.

The monthly CFNAI series is rather volatile so the three-month average is normally applied (CFNAIMA3); which also makes it serve as a monthly "GDP proxy" for the US economy. Any reading above zero indicates that the US economy is growing faster than trend GDP growth, which is about 2.5 percent. The CFNAIMA3 was mostly unchanged in December at 0.33 compared with 0.36 in November. In September the series printed 0.09 suggesting that overall, the US economy was stronger and growth more broadly based in Q4 even though the third-quarter GDP growth rate of 4.1 percent** will be hard to beat — but restocking of inventory was a key contributor to growth in Q3.

US GDP vs. Leading indicators

There is nothing in this report to discourage my call for a pick-up in growth in the US economy this year, and what is more important in the short term, this report confirms that the US economy continued to grow at a "moderate" (to use Fed-speak) pace in Q4, suggesting that from a fundamental perspective there is nothing hindering another tapering announcement at US Federal Reserve chairman Ben Bernanke's final Federal Open Market Committee meeting on January 28-29. An announcement is expected at 19:00 GMT with consensus currently forecasting another USD 10 billion drop in QE3 divided equally between Treasuries and MBS.


* The CFNAI is a composite of 85 individual economic time series.
** Quarter-on-quarter, annualised.

Mads Koefoed Mads Koefoed
Correct chart 2:


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail