Inflation dynamics to close out last year strongly point to a near-term return to the Federal Reserve’s 2% inflation target amid a solid labor market, strong spending and real income gains. While both top-line and core inflation are rapidly advancing toward the Fed’s target, inflation-adjusted ... READ MORE >
Joseph Brusuelas
U.S. economy booms at a 3.3% pace in the fourth quarter
The U.S. economy expanded at a robust 3.1% pace from a year ago and closed the year with a booming 3.3% rate of expansion on the quarter, according to Commerce Department data released Thursday. The strong gains were driven by household consumption, gross private investment and government spending ... READ MORE >
A rail merger and the evolution of North America’s supply chain
The merger of two major North American railroads will create a rail network that reaches both coasts and runs through the middle of the continent. The long-sought combination of Canadian Pacific and Kansas City Southern promises to make a seamless, faster supply network that will benefit Canada, Mexico ... READ MORE >
Friend-shoring and a new era of U.S. trade
The era of hyper-globalization ended with the trade war that began in 2017. In its place, global trade flows have fragmented to the point that by November 2022, U.S. trade with Mexico and Canada had surpassed China. In addition, as political risk has increased around the world, including the recent ... READ MORE >
How attacks on ships in the Red Sea are affecting trade
The deteriorating situation in the Red Sea poses risks to the global economy as supply chains are disrupted and prices are pushed higher. Geopolitical tensions have now spread into the Eastern Mediterranean and the Indian Ocean, underscoring the fragmentation of global trade relationships and ... READ MORE >
The price of eggs and public sentiment
Inflation is receding and the labor market is as healthy as it has been since the 1950s. Wages are higher in inflation-adjusted terms. Everyone who wants a job either has one or can find one quickly. And with the economy growing at healthy rate over the past year, one would think that Americans ... READ MORE >
December CPI: Sticky service and housing prices illustrate the difficult last mile in inflation fight
The December Consumer Price Index captures both the broader disinflation taking place inside the goods sector and the persistent inflation inside the service sector. Each generates its own economic and policy narratives that carry implications for the economy in a year of a closely fought ... READ MORE >
Rate normalization and the return of risk
Financial markets had a difficult start to the year after an exuberant end to last year. The yield on 10-year Treasury bills dropped from 5.0% to 3.8% to end the year as investors priced in an early start for monetary policy easing. Now, as the Federal Reserve signals rate cuts, we think conditions ... READ MORE >
U.S. income and spending see strong gains as year nears an end
This past year was a remarkable one in the American economy as inflation eased, employment gains remained rock solid and household consumption advanced at a robust pace. November’s personal income and spending report, released by the Commerce Department on Friday, showed a 0.4% monthly increase in ... READ MORE >
Fed signals end of rate hikes and projects cuts in 2024
The Federal Reserve signaled at its meeting on Wednesday that it is done raising its policy rate and is poised to reduce it by 75 basis points next year, with more cuts after that. The Fed also reduced its inflation forecast for next year to 2.8% from 3.3%, and to 2.4% from 2.5% for 2025, which ... READ MORE >