The American economy closed out last year on an upbeat note, finishing with a 6.9% growth rate in the fourth quarter on a seasonally adjusted annualized pace, according to Commerce Department data released on Thursday. For the full year, growth advanced by 5.7%, the strongest rate since 1984. The increase was driven by a strong rebound in the ... READ MORE >
Joseph Brusuelas
Fed to use conventional and unconventional tools to obtain price stability
The Federal Reserve on Wednesday signaled that it intends to use both conventional and unconventional tools to address risks to the economic outlook caused by inflation even as the economy remains short of full employment. The major changes to the Federal Open Market Committee statement released after the FOMC's meeting imply that policy normalization ... READ MORE >
Chart of the day: Omicron variant will extract a powerful economic toll
The health crisis caused by COVID-19 is entering its third year and is taking an ever-increasing human toll. This latest wave—attributed to the omicron variant—has infected around 814,000 people per day, which is 4.85 times greater than the peak of the wave attributed to the delta variant. The variant has caused many people to pull back on work and ... READ MORE >
How the Fed plans to use its balance sheet to craft a soft landing
Key takeaways The Fed will begin reducing its balance sheet by midyear. Expect a roll-off of $2.85 trillion by the end of 2024. The roll-off can be put on hold if economic conditions merit. The Fed is unlikely to sell assets back into the market under current conditions. Risks to the economic outlook from inflation have prompted the Federal ... READ MORE >
Monetary and fiscal policy in a changing economy: Why the natural rate of interest is key to Fed policy
This is the third of four articles examining monetary and fiscal policy and the Federal Reserve’s response to the most significant issues of today’s economy. The first article examined the Fed’s challenge in meeting its mandate for full employment. The second looked at the Fed's other mandate, for price stability. The Taylor Rule is a long-established ... READ MORE >
RSM US Supply Chain Index: The worst may have passed, but choppy waters remain
The strength of the supply chain in the United States showed significant improvement for a second straight month in December after reaching a two-decade low in October, according to the newest data from the RSM US Supply Chain Index. The index rose 24% on the month to 3.12 standard deviations below long-term normal conditions, implying that while ... READ MORE >
RSM US Financial Conditions Index: A move toward normal
After nearly two years of extreme accommodation in the financial markets, the RSM US Financial Conditions index stands at 0.96 standard deviations above neutral—a decline from the elevated levels during the pandemic and a sign that markets are starting to price in more risk. The index’s more modest level almost certainly reflects the Federal Reserve’s ... READ MORE >
Price stability now a paramount concern as inflation hits 7%
Price stability: Learn it, know it and love it because that is what the Federal Reserve will be talking about over the next two years as the central bank attempts to craft a soft landing following an increase in the Consumer Price Index to a 7% annual rate in December. The Consumer Price Index data released on Friday, though, implies anything but ... READ MORE >
December jobs report preview: Expect the unemployment rate to fall to 4.1%
We expect a net gain in total employment of 475,000 jobs and a decline in the unemployment rate to 4.1% when the jobs report for December is published on Friday. Strong job creation in higher-paying jobs in goods production, construction, manufacturing, business services and the financial sector should underscore what will most likely be a year in ... READ MORE >
Consumer confidence surveys reflect a bifurcation of the nation’s economy
Recent readings of consumer confidence are revealing an increasingly bifurcated economy as households continue to grapple with the pandemic. The economy can be divided into two camps, the surveys show: one of scarcity where prices are rising and employment remains a challenge, and one of abundance where rising prices present a modest impediment to ... READ MORE >