The debate of the moment in financial markets and regarding the direction of monetary policy centers around inflation: Is it a risk to the economy? The data and our forecast imply that while prices are rising in a cluster of industrial ecosystems that make up roughly 20% of the economy, we do not expect a ... READ MORE >
coronavirus
May jobs report preview: Seasonal adjustment challenges amid strong growth
We expect total employment to increase by 615,000 jobs when the employment report for May is released on Friday, with the possibility of a strong month of growth because of diminished seasonal effects linked to the echo of the pandemic-induced collapse in employment last year. As the unemployment rate ... READ MORE >
CHART OF THE DAY: Lumber futures down 33% over past month
Lumber futures have declined 33% since May 7, which likely reflects a mix of falling demand as contractors—shaken by the 372% surge in lumber prices during the past two years—back off potential projects and the slow but steady return of supply. In our estimation, this is one of the key input prices ... READ MORE >
Recovery monitor: Economy set to expand as income and spending close pandemic deficits
The pandemic-induced recession, which was characterized by its speed and severity, is rapidly becoming a memory as the economy shows remarkable signs of regaining its footing. Spending has reached its pre-pandemic level and we anticipate that June will mark the turning point at which the economy moves ... READ MORE >
How government payments during the pandemic improved household balance sheets
Consumers continued their pandemic-era rebalancing of household finances in the first quarter, shedding credit card debt and home equity lines of credit. These adjustments to household balance sheets appear consistent with increases in government transfers and changes in buying habits during the ... READ MORE >
April personal income and spending: Consumers push forward as demand for services surges
Demand for services jumped 1.1% in April as mass vaccinations accelerated, almost surely foreshadowing the coming surge in service spending that will be one of the defining narratives of the economy through the rest of the year. The composition of spending showed that demand for services increased ... READ MORE >
CHART OF THE DAY: Manufacturing sentiment remains high as global supply chain constraints cap growth expectations
Surveys carried out by four of the six regional central banks reported elevated manufacturing conditions, though there was some slippage from the lofty levels of the previous month. Rising prices and supply chain bottlenecks were the most likely reasons for the moderation of sentiment, providing ... READ MORE >
Initial jobless claims set a new pandemic low
First-time jobless claims for the week ending May 22 declined to 406,000, a new low during the pandemic, putting them on track to breach the 400,000 level in the coming weeks and return to levels not seen since before the pandemic. The number of people filing new claims for federal Pandemic ... READ MORE >
CHART OF THE DAY: Issuance of negative-yielding debt declines as global reflation takes hold
During the pandemic, issuance of negative-yielding debt—when purchasers pay for the privilege of locking in a loss—jumped from a pandemic low of $7.6 trillion in March 2020 to a pandemic peak of $18.2 trillion in December as investors sought safety. But that risk aversion appears to be ebbing as the ... READ MORE >
As markets for digital assets gyrate, regulators take notice
The Bloomberg U.S. Financial Conditions Index Plus has risen in recent weeks, surpassing an unprecedented three standard deviations above normal levels and signaling an extraordinary level of risk-taking in the financial markets. This risk augurs an increase in regulatory activity, especially when it ... READ MORE >