Despite what you might read or hear, the stock market is not the economy. But that does not mean you should ignore the effect that the stock market has on household income and spending, the labor market, overall financial conditions and economic growth. A 2021 paper in the American Economic Review ... READ MORE >
Economics
Softer economic data reaffirms prospect of a soft landing
The Federal Reserve's restrictive monetary stance showed that it continues to affect the economy in the first two months of the year. In other words, the Fed is getting closer to its goal of achieving a soft landing when the economy cools back down to a sustainable level of growth with inflation under ... READ MORE >
What would Keynes do? Russian assets and funding the war in Ukraine
August 1914: a global financial crisis caused by the outbreak of World War I resulted in the Bank of England’s losing two-thirds of its gold reserves in less than a week, placing at risk London’s pre-eminence as the center of global finance. To prevent a financial collapse, the U.K. government ... READ MORE >
New home sales grew more slowly in January amid elevated mortgage rates
Sales of new homes grew by 1.5% in January, much slower than the 7.2% increase in December, most likely because of elevated mortgage rates. January's sales were also lower than estimated while December's increase was revised down from the 8% increase reported earlier by the Census Bureau. Slower sales ... READ MORE >
Initial jobless claims fall to lowest in a month
Initial claims for unemployment insurance have once again defied expectations this year, continuing to signal a tight labor market that benefits workers. New claims fell by 12,000 to 201,000 for the week ending Feb. 17, according to the Labor Department's data on Thursday. With the exception of a ... READ MORE >
Natural gas and the move toward energy self-sufficiency
The major move toward energy self-sufficiency in the United States and in Europe in recent years has been the development of the U.S. natural gas industry and the export of liquefied natural gas to our allies. Natural gas accounts for roughly 30% of the energy used domestically, and the U.S. is now ... READ MORE >
Solow Residual: Total factor productivity and the U.S. economy
For decades, the productivity of American workers seemed stuck. No matter how hard people worked, or how much was invested, productivity, except for a few years, never seemed to move much. That may be changing. Last year, American productivity improved by 2.7%, and gained steam in the second half ... READ MORE >
Geopolitical tensions and risks to the inflation outlook
Just as inflation appeared to be coming under control in recent months, rising tensions in the Middle East have shaken this view and now represent the major risk to our economic and inflation outlooks. The focus of this new uncertainty centers on the energy markets, which have been roiled by ... READ MORE >
Inflation expectations remain remarkably well anchored
The inflation shock of the past three years is abating. One reason is that expectations of inflation continue to remain remarkably well anchored. The Federal Reserve’s five-year inflation forward breakeven rate-—a closely watched measure of pricing expectations—stands at 2.3%, which is below the ... READ MORE >
U.S. retail sales fall in January as holiday hangover sets in
In a break from recent years, American consumers began the year on a weak note as retail sales dropped by 0.8% on a monthly basis in January, according to Census Bureau data released on Thursday. That drop was the first time since 2018 that sales at retail stores, online and food service places ... READ MORE >