Vianney Ngounou’s Post

Changes in supply and demand can change the price of a good or service. Typically, an increase in supply causes the price to fall, whereas an increase in demand causes the price to rise. Economists are often interested in estimating how much price changes are driven by supply or demand ‘shocks’. This was a particularly important question following the COVID-19 pandemic and the rise in inflation in many advanced economies – was this due to supply or demand factors? And depending on the answer, how should monetary policy respond? The contributions of supply and demand shocks can be estimated using econometric models. One popular approach requires making assumptions about how the economy works and one of these assumptions is that supply curves are upward sloping and demand curves are downward sloping (‘sign restrictions’). There is general agreement that this assumption is correct, but it does not allow us to exactly estimate the contributions of shocks. Instead, it only allows us to say that the contributions lie within a range. Our researcher aimed to clarify what we can learn about the contributions of shocks to price changes when making assumptions about the slopes of supply and demand curves. Read the paper to learn more: https://bit.ly/3Mdkv9S Want to get to know our researchers? Check out our Researcher Profiles: https://bit.ly/3yK2IEb

The markets remain optimistic with expectations of further Fed rate cuts, supported by stronger than expected GDP revisions and steady consumer demand. Here's a quick take on the latest economic outlook.

Economic Update for Our Trading Company – July 24, 2024 U.S. GDP Growth and Personal Income The U.S. economy continues to show positive signs with a notable increase in personal income. In May 2024, personal income rose by 0.5%, adding $114.1 billion to the economy. This growth reflects a steady rise in disposable income and consumer spending, essential indicators for a thriving economy (BEA). International Trade and Investment However, the U.S. trade deficit has widened slightly. The deficit in goods and services grew from $74.5 billion in April to $75.1 billion in May 2024. This increase was primarily due to a higher goods deficit, although there was a marginal improvement in the services surplus (BEA). Foreign Direct Investment Trends On the investment front, new foreign direct investment in the U.S. decreased by 28% in 2023 compared to the previous year. This drop could influence future capital flows and trading activities, affecting our strategic decisions and market positioning (BEA). Given these economic trends, our trading strategies should focus on capitalizing on the increased consumer spending within the U.S. while being cautious of the expanding trade deficit. Exploring new markets and diversifying our investment portfolio will be crucial to mitigate risks associated with these economic fluctuations. Stay tuned for more updates and strategic insights!

Global Economic Growth Slows to 2.75% in July as Selling Price Inflation Hits Lowest Since October 2020 #globaleconomy #growth #sellingpirce #inflation #economy https://lnkd.in/dvXABh-w

Synopsis of DFM’s latest European. European Market Review and Weekly Macro-Economic Thoughts. Last week, European bond yields declined, with the short end of the curve seeing the most pronounced drop. Germany's yield curve is disinverting, mirroring trends in the United States, as the 10-year yield has now surpassed the 2-year yield for the first time since November 2022. In a notable shift, France's bonds are now perceived as riskier than Spain's for the first time since 2007, reflecting investor concerns over France’s rising debt and budget deficit. Equity markets reacted positively, with European stocks benefiting from China's newly announced stimulus measures. The euro remained steady against the dollar, trading at 1.1164. In the commodities market, Brent crude prices fell over 3% amid worries that China’s stimulus may not suffice to boost its economy, coupled with recession fears in the U.S. and expectations of increased oil supply from Libya and the OPEC+ coalition. To read more about our thoughts on each of these points, please go to:

Q1 GDP slowed to 1.6%, missing forecasts due to a big trade deficit and lower inventories. Despite stable domestic spending and business investments, higher inflation hints the Fed might keep rates unchanged. Stay tuned for insights on economic trends and things to watch for this week: https://lnkd.in/eJKSzZhY #Economics #AYdifference

What is on the economic horizon for 2025? Our Quarterly Outlook shares the latest information on market growth, inflation, tariff policies, interest rates, and more. 

📊FRED Expands PCE Data Coverage 📈 Exciting news! FRED has added 42 new data series related to the Personal Consumption Expenditures (PCE) price index. The U.S. Bureau of Economic Analysis recently started reporting two new PCE price indexes: - PCE excluding energy and housing - PCE excluding food, energy, and housing These new indexes provide valuable insights into inflation trends, excluding volatile components like energy and housing. Additionally, the BEA report includes detailed tables showcasing the contribution of various goods and services to overall inflation. Learn more and explore the new data series on FRED: https://lnkd.in/etVQjR2G #FRED #PCE #Inflation #Economics #DataAnalysis #StLouisFed #FederalReserve #MonetaryPolicy

Next is a series on global economic malaise.