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Intuit Survey

NABE Economists Do Not Expect “Tapering” in September

Contrary to the Bloomberg consensus, the NABE (National Association of Business Economists) survey shows that most economists do not expect the Fed to “taper” in September.


More from Bloomberg:


The Fed will reduce its monthly bond purchases from $85 billion at its next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey. The median estimate is for a cut to $75 billion each month.


More from WSJ:


Most economists say the Federal Reserve won’t begin scaling back its bond-buying program until later in the fall or early next year, according to a National Association for Business Economics survey released Monday.
The economists appear to be more cautious in their outlook than Wall Street banks and even some Fed officials that have looked to the central bank’s September 17-18 meeting as a point to begin easing the pace of bond purchases, currently at $85 billion a month.
Only 10% of 220 economists polled expect the wind down to start before the end of September. The survey found 39% expect the first tapering of purchases in the final three months of 2013 with the remainder saying the Fed will hold off at least until 2014.


This survey was unveiled while several Fed members gave their opinions last Friday about reducing the asset purchases program. All believe that currently, there is not enough data to make a tapering decision in September. San Francisco Fed President John Williams (non-voter) and St. Louis Fed President James Bullard (voter) seem to favor “tapering” later this year. However, Atlanta Fed President Dennis Lockhart (non-voter) could support September if data continue to point toward a sustainable improvement (growth and employment).


My view
I still believe that Fed will not begin to reduce its asset purchase program in September because:
- Since few days, excluding Dallas Fed President Richard Fisher, Fed non-voters, who are more hawkish than voters, have become more cautious concerning the need for “tapering” in September and could be disappointed by economic data.
- Indeed, despite some improvement in Europe and China, the latest US figures for July and August were disappointing and confirmed that growth forecasts published by Fed in June are not reachable. Moreover, investors begin to have concerns regarding the impact of higher mortgage rates to the extent that new home sales fell significantly in July.
Moreover, as Lockhart noted it, a difficult political situation in Washington in the fall could be a blow to confidence.

May Intuit Survey Shows that Small Businesses Hired the Most since January 2012

According to Intuit Survey, companies with fewer than 20 employees created 35,000 jobs in May which is the most jobs added since January 2012. Nevertheless, hourly employees worked an average of only 106.7 hours, down 6 minutes, from April. That’s a 24.6-hour work week, continuing a trend of declining hours that began in mid-2011.
This employment index is based on data from Intuit Online Payroll and QuickBooks Online Payroll, covering the period from April 24 through May 23.


More details from Intuit economist:


“The small business economic picture remains conflicted,” said Susan Woodward, the economist who worked with Intuit to create the indexes. “While May’s small business employment figures are the best we have seen since January 2012, small business revenues have continued to decline month over month on a per-business basis.”
“Among the industries tracked, small business retail revenues have been hit the hardest this past quarter, followed by small business healthcare, which has seen the biggest revenue decline over the past year. The silver lining continues to be the construction sector, which is the only one to see year-over-year revenue growth on a per-business basis. The good news is the hiring rate, which has been essentially flat since mid-2009, has picked up slightly.”


Note that this survey suggests that nonfarm payrolls which will be published on June 7 could be better than expected.