After more than a decade of disinflation and the threat of deflation, the Federal Reserve is now dealing with persistent inflation resulting from a pandemic-induced supply chain shock, a surge in consumer demand and yet another oil shock. This has resulted in an abrupt shift in policy to restore price ... READ MORE >
Joseph Brusuelas
Fed announces largest rate hike in nearly three decades as it seeks to restore price stability
The Federal Reserve lifted its federal funds policy rate to a range between 1.5% and 1.75% on Wednesday as it moves to restore price stability over the medium term. We now expect the Fed to hike the policy rate by 50 basis points in July and September and then by 25 basis points at each successive ... READ MORE >
Updated FOMC call: Fed to hike policy rate by 75 basis points
The economist John Maynard Keynes once famously quipped, “When the facts change, I change my mind.” And so it goes ahead of the Federal Open Market Committee’s policy meeting this week. Based on movements inside the rate markets, quickly changing inflation expectations and a rattled investor class, we ... READ MORE >
Bond market update: Inflation’s toll on returns, investment and growth
Inflation is now the most significant factor in investment decisions. Until the Federal Reserve creates the conditions approximating price stability—defined as the core personal consumption expenditures deflator averaging 2% over a defined period—the economy will remain at risk. This will almost ... READ MORE >
FOMC preview: 50-basis-point hikes through September
We expect that the Federal Open Market Committee this week will lift the federal funds policy rate by 50 basis points to a range between 1.25% and 1.5%, which the market has already priced in and should be of little surprise to investors, the public or other policymakers. What is of more interest is ... READ MORE >
Oil prices and price gouging: Deconstructing the price of gas
Rising energy prices have stimulated a fierce debate around inflation and what is behind the surge in gas prices. Are companies taking advantage of a stressful time in the economy and raising prices more than they need to? Accusations of price gouging and corporate greed now permeate the public ... READ MORE >
U.S. May jobs report: Robust gains in total employment as wage increases ease
American firms continued to hire workers at a torrid pace in May to meet strong demand amid a historically tight labor market and 8.3% inflation. Amid that robust increase in total employment of 390,000 in May, the three-month average annualized pace of average hourly earnings slowed to 4.3% on the ... READ MORE >
RSM US Manufacturing Outlook Index shows 35% probability of recession over next year
The RSM US Manufacturing Outlook Index declined into negative terrain in May, signaling the impact of high inflation, rising interest rates, the lockdowns in China and the war in Ukraine. While this decline does not imply that the manufacturing sector or the U.S. economy has fallen into a ... READ MORE >
RSM US Financial Conditions Index: Risk aversion returns
Financial conditions in the United States deteriorated again in May after a pause in late April. The recent selloff across equity markets is indicative of the policy shift at the Federal Reserve, which intends to tighten financial conditions to achieve price stability. While we continue to make the ... READ MORE >
U.S. April Consumer Price Index: Peak inflation provides no solace
About the best one can say about the April inflation report is that year-over-year metrics appear to have topped while core inflation increased, and housing costs that are up 6.5% from a year ago are now a policy issue that needs to be addressed. The data inside the report reflects a shift in demand ... READ MORE >