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Daily Economic Commentary

A collection of articles from Nationwide experts and guest authors about current events impacting the economy and financial markets.

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Daily Economic Commentary

Early cycle productivity boom underway

Nonfarm business productivity was stronger than expected in the first quarter, shooting higher by 5.4 percent, and is now up by an 11-year best 4.1 percent on an annual basis. It should come as little surprise that productivity is finally breaking out of a long slump, as this is the stage of the cycle in which it has historically advanced most rapidly due to the tendency for output to recover much more quickly than employment in the aftermath of recessions (consider that, even with the outsized gains of late, nonfarm payrolls are still 5.5 percent south of their pre-COVID peak while real GDP is off by just 0.9 percent). 

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Daily Economic Commentary

Bank lending standards continue to ease

The Fed's latest loan officer survey shows that bank lending standards eased on balance for the first time in nearly two years over the last three months. Specifically, 17.8 percent of large and mid-market banks respondents indicated that they eased standards in the February-April period while only 2.7 percent tightened. Actual lending has been constrained to this point – note that commercial bank loans and leases, while more stable in recent months, still haven't broken out of the downtrend that began last spring – but the rapidly improving labor market, the bubbling signs of a consumer spending spree, and the very constructive outlooks from the banks themselves all suggest that activity will pick up substantially in the quarters and years ahead. 

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Daily Economic Commentary

Supply chain dislocations evident throughout ISM report

The ISM manufacturing index recorded its largest decline in a year in April, falling to 60.7 from a prior 64.7. Each of the five components moved lower last month, although all but the inventory metric remained solidly in expansion territory. Moreover, some pullback was to be expected given the robust run of late; the ISM is a mean-reverting index and in recent decades has rarely sustained readings north of 60.0 for long (note that the index went 15 years, from the late 1980s to the early 2000s, without a single print in the 60s).