The labor market showed continuing strength as last week's new filings for jobless claims fell for the fourth week in a row, tempering recession concerns and bolstering the case for the Federal Reserve to stay aggressive in its interest rate increases. New claims dropped to 222,000, the fewest since ... READ MORE >
interest rates
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 >
Falling gas prices imply further inflation relief
Retail gasoline prices in the United States are poised to continue their recent decline as the summer driving season ends and households fall back into more traditional schedules. The average retail gasoline price has declined to $3.78 per gallon from a peak of $5.01 on June 13—a 21.2% drop—and ... READ MORE >
Housing proved a drag on Canada’s economy in the second quarter
Canada’s real gross domestic product rose by 0.1% in June from May amid a slumping housing sector, according to data released by Statistics Canada on Wednesday. For the second quarter overall, the economy posted a 3.3% gain, which fell short of expectations. While the economy is not in recession, the ... READ MORE >
Powell at Jackson Hole: From era of abundance to one of insufficient supply
The pandemic has been the catalyst for a seismic shift in the American economy as it shifts from an era of abundance to one of insufficient supply. For households, this implies a shift from what we call rational inattention regarding consumption to a more rational approach to spending. As ... READ MORE >
Better-than-expected GDP and jobless claims push back recession fear
The decline in U.S. gross domestic product growth in the second quarter was less than previously estimated, according to a revised report from the Bureau of Economic Analysis released on Thursday. GDP contracted by only 0.6% in the second quarter instead of by 0.9%, as estimated in July. In the same ... 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 >
Jackson Hole preview: Powell to set tone for next few years
The conversation around monetary policy among market participants has unfortunately revolved around a potential pivot by the Federal Reserve toward reducing rates because of an elevated risk of a recession. But Federal Reserve Chairman Jerome Powell will have the last word. His much-anticipated ... READ MORE >
Canada’s jobs fall in July as unemployment rate remains steady
Canada’s economy shed 31,000 jobs in July while the unemployment rate remained at a historic low of 4.9%, confirming what the strong gross domestic product numbers have been showing: The economy is not in recession. The low unemployment rate, released by Statistics Canada on Friday, furthers the ... READ MORE >
Monetary policy tightening, the bond market and the business cycle
Central banks in developed economies are contending with a series of shocks that have threatened price stability and, ultimately, economic growth. Now, these shocks, which include inflation, interest rate increases and energy market turmoil, are all showing up in fixed income markets. With consumer ... READ MORE >