US data booms as inflation swoons

• Osborne allays fears amid the jeers
• UK economy healthy, yet surplus plans seem ambitious
• US data points to buoyant economy
• Core PCE takes the wind out of the Fed’s sails

Today’s Autumn Statement will be remembered more for what it didn’t do than what it did, with widespread anxiety regarding cuts to tax credits and police numbers both allayed as the two proposed measures were scrapped, for now. With the homebuilders representing the biggest FTSE gainers prior to the statement, it was more a case of ‘buy the rumour, sell the fact’ despite the housing budget doubling to build 400,000 new affordable homes by 2020. As the OBR raised the 2016 growth forecast to 2.4%, there is no doubt that the economy feels like it is on the right path. Yet with George Osborne delaying many of the needed cuts, the promise to achieve the budget surplus the Conservatives speak of so often seems hopeful at best.

Tomorrow’s Thanksgiving holiday meant that today saw the US have somewhat of a bumper period of economic data, with inflation, spending, services, manufacturing and employment numbers all released. With such a raft of important figures released in one day, it was always going to be difficult to ascertain one single message from the data. Yet with US services activity rising to a seven-month peak, core durable goods at a three-month high and jobless claims at the lowest level in a month, there is no doubt that the US economy is moving in the right direction. Unfortunately, the issue of inflation is likely to remain a crucial issue, with the Fed’s favoured measure, the core PCE price index, failing to grow for the first time in ten months. Given that this measure strips out food and energy factors, it is clear that the world is living within a period where disinflation may not solely be attributed to the price of oil.