Disinflation, strong household consumption and incomes rising above the rate of inflation continue to be the defining narrative of the U.S. economy as it heads into the second half of the year. With the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures index, ... READ MORE >
Inflation
Second quarter GDP is revised higher amid stronger consumer spending
The growth scare that rocked the market in early August looks premature after the release of new data on gross domestic product and jobless claims. Growth was stronger in the second quarter, revised up to 3.0%, than the first estimate, driven largely by a sharp upward revision to consumer spending, ... READ MORE >
The TIPS bond market sees 2.1% inflation over the next 10 years
As inflation moves back toward the Federal Reserve’s 2% target, investors and firm managers will be looking at market-based measures of inflation expectations to make their decisions. Treasury Inflation-Protected Securities, or TIPS, are one of those measures used to make such ... READ MORE >
Canada’s inflation fell to 2.5 per cent, solidifying case for rate cut
Canada’s consumer price index fell to 2.5 per cent in July, the lowest level since March 2021, solidifying the case for the Bank of Canada to cut its policy rate this month. The disinflation was broad-based and included components from food to recreation and, most notably, shelter. All measures of ... READ MORE >
Seven reasons why the U.S. economy will not fall into recession
Market panics are a normal part of American business cycles. The recent scare, driven by a combination of slower hiring and the partial unwinding of the global carry trade, stands in contrast with resilient household spending, a fiscal tailwind and solid, if unspectacular, fixed business investment in the ... READ MORE >
Fed holds rates steady as it sets up for September cut
The Federal Open Market Committee kept its federal funds policy rate between a range of 5.25% and 5.5% at its meeting Wednesday while signaling that it is moving toward easing its restrictive policy rate. We expect that the FOMC will reduce the policy rate by 25 basis points at its September ... READ MORE >
PCE inflation continues to ease in June as income and spending gain
The Federal Reserve’s preferred measure of inflation continued to ease in June, reaffirming that the central bank has achieved enough price stability to reduce its policy rate at its September meeting, which has been our baseline forecast for a number of months. Top-line inflation in the personal ... READ MORE >
American economy grew by 2.8% in second quarter, exceeding forecasts
The U.S. economy advanced at a 2.8% pace in the second quarter, exceeding RSM’s forecast of 2.4%, and was up by 3.1% on a year-ago basis. For the first half of the year, average growth was 2.1%, which should put to rest any arguments that the economy is about to fall off a cliff. Perhaps more ... READ MORE >
Bank of Canada reduces rate to 4.5 per cent amid disinflation
There was little surprise in the Bank of Canada’s announcement on Wednesday when the central bank reduced its policy rate by 25 basis points to 4.5 per cent. The tone of the central bank's statement was notably dovish and marked a departure from a hawkish or cautionary tone that persisted over the past ... READ MORE >
GDP preview: U.S. top-line growth to show solid increase
We expect a 2.4% pace of growth with modest downside risk to our forecast when gross domestic product for the second quarter is released on Thursday. The two main swing factors are inventories, which should be quite strong and are likely to make overall top-line economic activity appear stronger than ... READ MORE >