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 >
Joseph Brusuelas
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 >
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 >
Payroll employment returns to pre-pandemic levels
The unemployment rate in the United States, taken out to three decimal points, now stands at 3.458%, the lowest in 50 years and one that many of us will most likely not observe again in our career arcs. Perhaps more important, the labor market has reached a milestone: a general return to pre-pandemic ... READ MORE >
U.S. July employment report: A recession is not yet at hand
Economies in recession do not produce 528,000 jobs in a given month and have 3.5% unemployment rates. Since January, total employment has increased by 3.3 million jobs and the unemployment rate has declined from 4% to 3.5%. With such a robust labor market, claims that the economy is in recession fall ... READ MORE >
Labor force dynamics: 60,000 jobs per month are needed to keep the jobless rate near 4.4%
Long-run changes in the labor force have slowed its growth and are likely to result in a shortage of workers even if the economy falls into recession. Between 2008 and 2020, the labor force grew at an average rate of 0.06%. Assuming that does not slow further—it very well could because of ... READ MORE >
Can a price cap on Russian oil work?
The United States is urging its trade partners to adopt a novel proposal that would put a cap on the price of Russian oil during a time of shortcomings in global production. It’s a creative idea, but it carries risks and could result in another surge in oil prices. Middle market firms need to ... READ MORE >
U.S. June CPI: Persistent top-line inflation hits 9.1%
The past few years have been characterized by a series of economic shocks that have wreaked havoc with just about every area of the American economy. The most recent set of energy shocks has sent the top-line consumer price index to 9.1%, a four decade high, on the back of an 11.2% increase in ... READ MORE >
U.S. employment report for June indicates no recession now
An American economy in free fall does not tend to produce 372,000 jobs in any given month, as the June employment report showed on Friday. The data released by the Labor Department strongly implied that the economy is not in recession, which is in line with our base case that the economy will ... READ MORE >
U.S. June jobs preview: Slower hiring in rate-sensitive industries
We expect the June U.S. employment report to show a total gain of 225,000 jobs, with risk of a stronger pace of hiring and an increase in the unemployment rate to 3.7%. Given the Federal Reserve’s campaign to increase the policy rate that has reshaped economic expectations, we expect a reduced pace of ... READ MORE >