All Posts Tagged: economy

U.S. Outlook: The Fed thinks twice about raising rates again

Scott Anderson
Chief Economist

Chairman Jerome Powell and the FOMC rapidly shied away from further rate hikes at this week’s FOMC meeting. Spooked by slowing U.S. inflation, Close up of the Federal Reserve building with the eagle statue slowing growth in Europe and China, and bond market signals of more trouble ahead, the Fed retreated further from their rate hike guidance for 2019.

Powell signaled a prolonged pause in further rate hikes and opened the door that the next rate move from the Fed could, in fact, be a rate cut. The FOMC continued to describe current economic conditions as solid and their baseline forecast remains that the U.S. expansion will continue, but the cross-currents of slowing inflation and downside risks to global growth were enough to weaken the case for further rate hikes.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Feb. 1.

Key observations:
  • The Fed estimates that the Fed funds rate is already at the lower-end of estimates of the neutral rate, suggesting that further rate hikes could lead to unfavorably slower growth and an unwelcome period of disinflation.
  • Despite robust job growth of 304,000 in January, real consumer inflation pressures appear a long way off. There has been widespread declines in global commodity prices over the past year.
  • Given the FOMC’s rapid change of heart and our own forecast that core-PCE inflation will not return to the FOMC’s 2.0% target until the fourth quarter of 2019, we think the Fed is on hold now until the December FOMC meeting, where we are forecasting one final quarter-point rate hike.

Read my full report.

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U.S. Outlook: Moderate job growth continues in January

Scott Anderson
Chief Economist
Busy, crowded street scene in Times Square, NYC

Will moderate growth continue? Scott Anderson analyzes the economic data in this week’s U.S. Outlook.

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California Economic Outlook – December 2018

Scott Anderson
Chief Economist
Palm-lined tree street in Southern California

Job growth in California has exceeded national job growth for the past 80 months through October, a testament to the continued strength of the state’s labor market.

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U.S. Outlook: Market fears of near-term recession overblown

Scott Anderson
Chief Economist
Busy work environment with stock traders concentrating on their computers.

As recently as September when U.S. stocks were hitting new record highs, economic optimism was rampant and, in retrospect, probably overdone.

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U.S. Outlook: Job growth downshifts in November

Scott Anderson
Chief Economist
Closeup of lab workers wearing goggles and examining specimens up close.

The payroll report for November appears to confirm the recent market narrative, and our own economic forecast, that U.S. economic growth is decelerating in the fourth quarter.

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