The American economy closed out last year on an upbeat note, finishing with a 6.9% growth rate in the fourth quarter on a seasonally adjusted annualized pace, the fastest pace since the 7.2% rate in 1984. Growth advanced by 5.7% for the full year on an annual basis, also the strongest rate in nearly four decades. The increase was driven by a strong ... READ MORE >
Economics
The middle market economy—often overlooked in the wake of large public companies and emerging Wall Street darlings—is the backbone of U.S. economic growth, accounting for the majority of new U.S. jobs and some 40 percent of the nation’s GDP.
Fed to use conventional and unconventional tools to obtain price stability
The Federal Reserve on Wednesday signaled that it intends to use both conventional and unconventional tools to address risks to the economic outlook caused by inflation even as the economy remains short of full employment. The major changes to the Federal Open Market Committee statement released after the FOMC's meeting imply that policy normalization ... READ MORE >
Bank of Canada keeps rates steady but prepares for rate hikes ahead
The Bank of Canada kept its policy rate at 0.25% at its January meeting on Wednesday as it prepares to hike rates in March and subsequently draw down its balance sheet. In its announcement, the central bank has removed its exceptional forward guidance on its policy rate, saying that “the economic slack is now absorbed.” While the market has priced ... READ MORE >
Chart of the day: New home sales rise above 11% for second straight month
Sales of new single-family homes in December beat the market's median estimate by a wide margin, rising by 11.9% to 811,000 on an annual basis, according to data released by the Commerce Department on Wednesday. Although November's reading for the month-over-month change was revised down to 1.7%, that marked the second month of back-to-back increases of ... READ MORE >
Chart of the day: Consumer confidence falls as omicron sets in
Consumers showed less confidence in January as the impact of the omicron variant weighed on expectations, according to a report from the Conference Board on Tuesday. The headline index slid to 113.8 from 115.2 in December, snapping a string of gains since September, when the economy came out of the delta wave. The fast-spreading omicron variant, while ... READ MORE >
Chart of the day: Omicron variant will extract a powerful economic toll
The health crisis caused by COVID-19 is entering its third year and is taking an ever-increasing human toll. This latest wave—attributed to the omicron variant—has infected around 814,000 people per day, which is 4.85 times greater than the peak of the wave attributed to the delta variant. The variant has caused many people to pull back on work and ... READ MORE >
FOMC preview: Shaping expectations for a major policy shift
The policy objective at Wednesday’s meeting of the Federal Open Market Committee will be to prepare market participants for the major shift in policy that lies ahead: a rate hike in March, another in June, and a balance sheet runoff likely to start in June or July. Policymakers and investors should anticipate no change in the policy rate but should ... READ MORE >
How the Fed plans to use its balance sheet to craft a soft landing
Key takeaways The Fed will begin reducing its balance sheet by midyear. Expect a roll-off of $2.85 trillion by the end of 2024. The roll-off can be put on hold if economic conditions merit. The Fed is unlikely to sell assets back into the market under current conditions. Risks to the economic outlook from inflation have prompted the Federal ... READ MORE >
Monetary and fiscal policy in a changing economy: Why the natural rate of interest is key to Fed policy
This is the third of four articles examining monetary and fiscal policy and the Federal Reserve’s response to the most significant issues of today’s economy. The first article examined the Fed’s challenge in meeting its mandate for full employment. The second looked at the Fed's other mandate, for price stability. The Taylor Rule is a long-established ... READ MORE >
Chart of the day: Existing home sales fall 4.6%
Existing home sales in the United States cooled off significantly in December, dropping 4.6% on the month to 6.18 million amid near-record housing prices and supply constraints, according to a report from the National Association of Realtors on Thursday. Still, 2021 was a record year for the housing market with 6.12 million existing homes sold—the highest ... READ MORE >