US growth outlook improves – ANZ

Brian Martin, Head of Global Economics at ANZ, suggests that the prospect for divergent monetary policies returning to reassert themselves as a material influence on EUR/USD seems greater in the coming months than it has been this year.

Key Quotes

“As the US labour market tightens, the prospect of a recovery in business investment is rising as firms substitute capital for wages and as skill shortages intensify. As the oil price stabilises and the US rig count increases, the drag on investment from the oil price collapse should stabilise.

Consumer confidence is at post-GFC highs and average earnings growth is gradually picking-up (September +2.6% y/y). Wealth effects could also be a source of significant support. In Q2 2016, US household net worth was USD89.1trn – up sharply from USD56.2trn at the end of 2008. The savings rate has normalised (5.7%) and while there are material issues with inequality, under a new President, middle class tax cuts should help support future consumption. This economic backdrop seems materially more upbeat than in Europe.”