By adopting a flexible average inflation target, the Fed is using its most important tool — forward guidance – to infuse confidence in investors and the general public that it will do all it can to sustain the economic recovery needed in the wake of the coronavirus. … READ MORE >
Economics
FOMC comment: Fed follows through on its policy shift
Combined with the forward-looking interest rate forecast included in the Fed’s Summary of Economic Projections, the FOMC’s statement shows that we are looking at five years at the least of rates remaining pinned to the zero boundary, if not far longer. … READ MORE >
CHART OF THE DAY: Retail sales rise amid soft back-to-school spending
Retail sales grew for the fourth month in a row in August, but the expected lift from back-to-school spending was not as great as anticipated. … READ MORE >
CHART OF THE DAY: U.S. industrial production expansion was smaller than expected in August
After three months of sharp increases, U.S. industrial production growth was smaller than expected in August, according to a Federal Reserve report released Tuesday. … READ MORE >
Tracking the spread of COVID-19: A summer so foul
There have been more than 6.7 million cases of coronavirus infections and more than 198,000 deaths, according to the WorldoMeters database. Despite improvement in recent weeks, the rate of infections remains elevated heading into the fall. … READ MORE >
Savings, the money supply and inflation during a pandemic-induced recession
The changing structure of the economy, the integration of advanced technology, and broad demographic changes have contributed to the conditions that have all but ended the idea that inflation is always and everywhere a monetary phenomenon. … READ MORE >
CHART OF THE DAY: The velocity of money and recession
The broad and deep shock unleashed by the pandemic has caused the velocity of money to decline to a modern low of 1.1. … READ MORE >
FOMC preview: Updated economic projections
This week, the focus will be on an update of the summary of economic projections, the first look at the Fed’s 2023 forecast and a reiteration that the Fed will keep the policy rate effectively at zero until the economy has recovered. … READ MORE >
CHART OF THE DAY: Higher food costs during the pandemic
The latest consumer price inflation data confirms what we all know – it costs more to eat during the pandemic, but it costs a lot less to drive to your favorite closed restaurant. … READ MORE >
Consumer Price Index: Modest increase in prices, inflation expectations well anchored
Strong demand for transportation and energy, which increased by 1.3% and 0.9% in August, were the primary catalysts for the 0.4% increase in the Consumer Price Index. The all-important core CPI excluding food and energy rose by a similar amount. … READ MORE >