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
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 >
CPI: Fed to remain patient as real wages rise 1.4%
Energy and goods disinflation continue to underscore slower growth in the U.S. Consumer Price index, which increased by 0.3% on the month and by 3.1% on an annual basis, according to Labor Department data released on Tuesday. Disinflation in the energy and the goods sectors has now resulted in a ... READ MORE >
Revising our 2024 inflation outlook: Moving back to a 2% target
The recent easing in inflation, a clear downward trend in rents and what we think is a budding productivity boom have led us to revise our inflation forecast for the year. We now expect that the Federal Reserve’s preferred measure of inflation—the personal consumption expenditures price index—will ... READ MORE >
Service sector grows faster than expected in January
The service sector continued its impressive expansion in January, growing for 43 of the past 44 months, according to the data released by the Institute for Supply Management on Monday. The overall index posted an upside surprise, rising to 53.4% from 50.5%. Anything above 49% generally indicates an ... READ MORE >
Spending remains strong as a key inflation gauge declines toward Fed’s target
Inflation dynamics to close out last year strongly point to a near-term return to the Federal Reserve’s 2% inflation target amid a solid labor market, strong spending and real income gains. While both top-line and core inflation are rapidly advancing toward the Fed’s target, inflation-adjusted ... READ MORE >
Bank of Canada holds rates steady at 5% amid weak growth
As expected, the Bank of Canada on Wednesday maintained its policy rate at 5 per cent and continued its restrictive monetary policies. At the same time, though, its public statements signed a more dovish tone. In softening its rhetoric, the central bank noted the slowdown in the global and domestic ... READ MORE >
Retail sales and industrial production point to a strong end of the year
Resilience not recession is the right "R" word to describe the American economy in December. Wednesday's data from the Commerce Department showed retail sales blowing past expectations while industrial production volume stayed solid. The upside surprises, together with a robust labor market, prompted ... READ MORE >
The price of eggs and public sentiment
Inflation is receding and the labor market is as healthy as it has been since the 1950s. Wages are higher in inflation-adjusted terms. Everyone who wants a job either has one or can find one quickly. And with the economy growing at healthy rate over the past year, one would think that Americans ... READ MORE >