Further evidence of tightened lending conditions and a potential credit crunch can be seen in the notable decline in demand for credit by large and middle market firms, a new survey of loan officers from the Federal Reserve shows. This decline will affect the real economy in the near term ... READ MORE >
Inflation
Fed hikes rate a quarter point while creating framework for a pause
The Federal Reserve increased its policy rate for the tenth consecutive time on Wednesday, pushing the federal funds rate to a range between 5% and 5.25%. The 25 basis-point increase was accompanied by changes in the Federal Open Market Committee’s statement that imply a possible pause at ... READ MORE >
Fed’s gauges on wages and inflation seal the deal on another rate hike
The Federal Reserve's key labor costs metric for the first quarter came in hotter than expected Friday, helping to seal the deal on the central bank's 10th consecutive rate hike in May, while raising the probability of another one in June. The Employment Cost Index rose 1.2% in the quarter, and the ... READ MORE >
U.S. growth slows to 1.1% as businesses pull back
Growth in the first quarter expanded at a 1.1% annualized pace and by 1.6% on a year-ago basis as a modest inventory correction—a net drag of 2.26%—and a large pullback in business investment—a net drag of 2.34%—offset the robust 3.7% increase in overall household consumption. This data, ... READ MORE >
Consumer confidence drops to lowest level since July 2022
Consumer confidence in April dipped to the lowest level since last July, driven by the deterioration in economic expectations as recession concerns mount. The top-line confidence index in April fell to 101.3 from 104.0 in March, while the expectations index dropped sharply to 68.1 from 74.0, ... READ MORE >
Growth, employment and identifying the end of a business cycle
Growth during the first quarter most likely expanded at a 2.35% pace based on our RSM economic forecast in contrast with the 2% consensus. This growth, though, is not likely to last. Given the emerging consensus among economists that the economy will fall into a recession this year, a ... READ MORE >
Canadian inflation fell to lowest since August 2021
Canada’s inflation rate dropped to 4.3% in March on an annual basis from 5.4% in the prior month, driven largely by comparisons to the surging energy and food prices of a year ago, according to data released by Statistics Canada on Tuesday. While disinflation was expected as the Bank of ... READ MORE >
Lower-than-expected retail sales raise recession probability
Retail sales dropped for the second month in a row in March as demand for goods and food services continued to ease, suggesting the end of the business cycle. If interest rate increases take six to 12 months to be felt in the economy—the accepted wisdom before the pandemic—then it is likely ... READ MORE >
March inflation data points to a Fed rate peak in May
The inflation outlook improved in March because of a mix of year-over-year base effects and a significant decline in energy prices, all of which caused the top-line reading to decline to 5% from 6% previously. The core estimate, which excludes food and gasoline, eased to 5.6%, while the ... READ MORE >
What the surprise oil production cut by OPEC+ means
Oil markets are reeling after OPEC+ said in a surprise announcement on Sunday that it would cut up to 1.15 million barrels a day in its target production starting next month. The announcement comes on top of Russia’s intentions to reduce its own production by 500,000 barrels per day from ... READ MORE >