U.S. Economic Data Surprising Forecasters [View all]
U.S. economic data are outperforming expectations by the most in nine months, a trend Federal Reserve officials may incorporate into their policy statement tomorrow.
The Citigroup Economic Surprise Index, a daily measure of whether economic data is better or worse than economists’ projections, improved to 85.7 on Dec. 2, the highest since March 9, after the Labor Department reported an unexpected drop in the jobless rate. The index is calculated on a three-month rolling basis and weighted for the importance of the indicator.
“Most of the economists are missing the underlying strength” in the world’s largest economy, said Joel Naroff, president of Naroff Economic Advisors, Inc. in Holland, Pennsylvania. The Fed will “modestly upgrade the economic outlook but change little else.”
November unemployment at the lowest level in more than two years and manufacturing running at the fastest pace in five months are among data that may dissuade Fed Chairman Ben S. Bernanke and fellow central bankers from pursuing a third-round of large scale asset purchases. At the same time, the Fed may still see “significant downside risks” for the economy as Europe’s financial crisis evolves.