All Posts Tagged: employment

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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Investment Insights: Keep your chin up

Wade Balliet
Posted by Wade Balliet
Investment Strategy
Stocks displayed on an iPad.

Both stocks and bonds entered a slump over the past few days as rising yields weighed on equity prices.

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U.S. Outlook: On the hunt for a better job

Scott Anderson
Chief Economist
Business man on Wall St. at top of escalator carrying folded newspapers

It is widely known that the U.S. economy is creating new jobs at a rapid pace. Since the expansion started, the economy has added nearly 20 million jobs.

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Instant Analysis: FOMC statement for March

Scott Anderson
Chief Economist
Facade of the Federal Reserve building in Washington DC on a sunny day.

The FOMC raised the fed funds target rate range another quarter percentage point today to between 1.50% and 1.75% and maintained its median forecast for three quarter-point rate hikes by the end of 2018 and 2019.

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Instant Analysis: Jobs report for December

Scott Anderson
Chief Economist
Busy office setting with several well-dressed stock traders checking activity on their computer terminals.

The labor market continues to firm but is not yet at the overheating stage.

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