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Hey there, forex friends! We’ve got another FOMC statement coming up this Wednesday (April 27, 7:00 pm GMT), so I thought that now will be a good time as any to give y’all a snapshot of how the U.S. economy is doing recently.

Note: As with all Forex Snapshots, there are nifty tables at the bottom, so you can skip to those if you’re a forex trader who’s in a hurry. The bullet points provided highlight the underlying details and trends that give the numbers their proper context, however.


  • The final quarter-on-quarter estimate for Q4 2015 U.S. GDP growth was upgraded from +1.0% to +1.4%.
  • This is still slower than Q3’s +2.0% expansion, though.
  • This also marks the second consecutive month that quarter-on-quarter GDP grew at a slower pace after peaking at +3.9% back in Q2 2015.
  • Year-on-year, U.S. Q4 2015 GDP grew by +2.0%, which is a bit slower than Q3’s +2.1% growth.
  • Annual GDP growth has been slowing down for three straight quarters now.
    Consumer spending or “personal consumption expenditure” continues to power the U.S. economy, having a positive contribution of +1.66% to quarter-on-quarter growth and +2.11% to year-on-year GDP growth.
  • Net trade continues to be a drag on the U.S. economy, subtracting 0.14% and 0.64% from quarter-on-quarter and year-on-year growth respectively.
  • Business investment contracted for the second straight quarter, subtracting 0.16% from Q4’s quarter-on-quarter GDP growth.
  • Corporate profits in Q4 2105 also slumped very hard by 7.8% quarter-on-quarter and 11.5% year-on-year.
  • When compared to all of 2014, corporate profits for all of 2015 was down by 3.1%, which is a seven-year low.
  • The slump in corporate profits threatens both employment and future business investment.


  • Non-farm employment change in March came in at +215K, which is better than the expected +202K, but smaller than the previous month’s +245K.
  • The U.S. economy has been gaining jobs for the 66th straight month now.
  • Most of the job gains in March came from the service sector (+199K jobs) yet again.
  • However, most of the service sector jobs came from low-income industries (minimum wage in fact) such as retail trade (gas station attendants, retail clerks, etc.) and food services (waitresses, burger flippers, etc.).
  • Job shedding in the high-paying manufacturing sector also continued, with 29K jobs lost in March (-18K previous) and almost all sub-sectors getting hit.
  • The manufacturing jobs lost in March is the biggest ever on record since 2009.
  • Despite the net increase in non-farm jobs, the jobless rate ticked higher to 5.0%.
  • This was due to the labor force participation rate ticking higher to a two-year high of 63.0%.
  • This also means that the U.S. economy was not able to absorb the influx of new or returning workers.
  • The labor force participation rate has been trending higher for the fourth consecutive month now.


  • The monthly headline reading for U.S. CPI was able to recover by 0.1% in March after dipping by 0.2% previously.
  • Meanwhile, the year-on-year headline reading continued to trend lower for the second consecutive month by coming in at 0.9% (+1.0% previous).
  • The year-on-year core reading was a tick lower in March (2.2%) compared to the previous month’s 2.3%, which was the highest reading since 2009.
  • Oil-related components are still the main drags to the year-on-year reading, with fuel oil down by 34.8%, but non-food and non-energy commodities (apparel for the most part) were also a major drag, which is why the core reading took a hit as well.
  • On a monthly basis, the 1.1% drop in the price of apparel, which is the biggest since 1998, was the main drag.
  • Oil-related components are no longer a drag on a monthly basis, with fuel oil actually increasing by 1.7% (-2.9% previous).

Business Conditions & Sentiment

  • Total industrial output contracted by 2.0% year-on-year in March, which is worse than February’s 1.8% contraction.
  • In terms of trends, annual industrial output has been contracting at a faster pace for two straight months, which doesn’t bode well for Q1 2016 GDP.
  • Annual industrial output has also been in negative territory for seven consecutive months now.
  • Total industrial production also contracted by 0.6% month-on-month, same as last time.
  • The month-on-month contraction in March was due mainly to the 0.3% contraction in manufacturing output, which is the biggest fall since Febuary 2015.
  • Nonetheless, ISM’s manufacturing PMI report finally, uh, reported that business conditions in the manufacturing sector improved in March (51.8) after four straight months of deteriorating conditions.
  • ISM’s non-manufacturing PMI reading, meanwhile, rose to a three-month high of 54.5.
  • Markit’s manufacturing PMI reading also registered an increase in March, but Markit’s preliminary report for April came in at 50.8, which is the lowest reading on record since September 2009.
  • Commentary from Markit’s manufacturing PMI report noted that “Softer rates of manufacturing output and new business growth, alongside a weaker rise in staffing numbers, were the main factors weighing on the headline PMI figure during April.”

Consumer Sentiment & Spending

  • Retail sales in the U.S. fell by 0.3% in March after stagnating during the previous month.
  • Retail sales contracted by 0.4% back in January, which is not a good sign for Q1 2016 GDP.
  • The poor retail sales reading in March was mostly due to lower vehicle sales, which is why the core reading increased after stagnating back in February.
  • Year-on-year, the value of retail sales only grew by 1.7% after three straight months of faster increases that peaked at 3.7% back in February.
  • This was primarily due to a 15.6% decrease in the retail sales value of gasoline.
  • Anyhow, the University of Michigan’s index of consumer sentiment declined for the fourth straight month to a seven-month low of 89.7.


  • The U.S. trade deficit widened to $47.06 billion in February (-$45.88 billion previous), which is the biggest trade deficit in six months.
  • This was due to exports increasing only by 1.01% to $178.07 billion whereas as imports grew by 1.33% to $225.13 billion.

U.S. Economy: Growth

U.S. Economy: Employment

U.S. Economy: Inflation

U.S. Economy: Business Sentiment & Conditions

U.S. Economy: Consumer Spending & Sentiment

U.S. Economy: Trade

Putting it all together

Fed officials voted to hike the Federal Funds Rate back in December. But as it turns out, GDP was growing at a slower pace, which is not exactly the ideal scenario for hiking rates, so much so that the Fed downgraded their growth projections while admitting that they only now have room for two rate hikes (originally four) during the March meeting.

And it just so happens that the available economic reports for the Q1 months aren’t all that promising. The trade deficit in February was the widest in six months, for example, so trade will very likely be a bigger drag on GDP growth than it was back in Q4 2015. Retail sales during the Q1 2016 months were also either stagnant or contracting on a monthly basis, which will very likely hurt the quarter-on-quarter GDP reading at least. Industrial output has also been contracting, which is also bad for GDP growth.

An April rate hike highly unlikely at this point since the FOMC minutes of the March meeting revealed that “several” members were wary of an April rate hike. But given all the above, it’s highly probable that the Fed will continue to have a dovish stance during the upcoming FOMC statement. As to whether or not this will be enough to kick the Greenback lower remains to be seen, however.