Premature calls for the Federal Reserve to pause or pivot on its campaign to tame inflation should be politely dismissed given the 0.1% increase in top-line inflation in August. That gain translates into a 8.3% year-over-year increase in the headline number, according to government data released ... READ MORE >
inflation
Bank of Canada increases policy rate to 3.25%
The Bank of Canada increased its policy rate by 75 basis points on Wednesday, bringing the overnight rate to 3.25%, and said that it would continue to reduce its balance sheet. The rate hike came as no surprise, with inflation still pervasive. While economic growth has moderated abroad and at ... READ MORE >
Service sector continued to expand in August
Service sector growth inched up in August, marking the 27th month in a row of expansion despite recession fears, according to data from the Institute for Supply Management released on Tuesday. New orders and employment, a proxy for future business activities, also grew faster in August, suggesting a ... READ MORE >
After a strong recovery in Canada, economic headwinds set in
The Canadian economy has had a robust recovery from the lockdowns of the pandemic as pent-up consumer demand and generous government spending have fueled growth. But now with rising inflation, especially in food and energy prices, and a historically tight labour market, that growth is ... READ MORE >
How high must unemployment rise to tame inflation?
Restoring price stability is now the paramount policy goal at the Federal Reserve. Chairman Jerome Powell went out of his way on Friday to point out the lessons of the high inflation in the 1970s and 1980s, and the sacrifice it took to wring it out of the economy after years of delays. "Our aim is to ... READ MORE >
Expectations at the end of business cycles
The Federal Reserve has a blunt yet effective instrument to fight inflation: raising the federal funds rate. But using it requires a delicate balancing act. In the best-case scenario, the Fed, by raising rates, reduces discretionary spending enough to stabilize prices, and the economy continues to ... READ MORE >
University of Michigan survey: Consumer sentiment rises on better economic outlook
U.S. consumer sentiment rose more than expected in August on the back of the sharp drop in gasoline prices, but remains near a record low as consumers shouldered multi-decade-high inflation and continuing economic uncertainty. The University of Michigan's monthly consumer sentiment index increased from ... READ MORE >
US July CPI: Inflation posts likely peak as commodity, gas and transportation prices fall
Commodity, oil, and gasoline prices declined noticeably in July, driving the pace of top-line inflation lower even as core inflation continued to increase at a torrid pace. This will provide a large boost to overall consumption and economic activity as Americans likely spent roughly $400 million less on ... READ MORE >
Job openings drop in June amid Fed’s attempt to control inflation
Job openings in the United States fell for the third straight month in June as the labor market started to loosen up, the Bureau of Labor Statistics reported on Tuesday. Job openings—which represent labor demand—have been the main target of the Federal Reserve to lessen the second-round impact on ... READ MORE >
Have we entered a “goods-cession” or goods fatigue?
In the June 2022 real consumer spending data released by the Bureau of Economic Analysis on Friday, on a three-month annualized basis, spending on both durable and non-durable goods declined for the second consecutive month, furthering the evidence we are in the midst of a “goods-cession.” After a ... READ MORE >