Sustained strength in wages continues to attract workers back into the American labor force, which resulted in a net increase of 428,000 jobs in April—the second such increase in a row—as the unemployment rate held steady at 3.6%. Since the beginning of the year, the economy has added 2.1 million ... READ MORE >
Joseph Brusuelas
FOMC preview: Rate hikes and balance sheet reduction are up next
Next week’s Federal Open Market Committee meeting will kick off an extraordinary two months of policy decisions by the Federal Reserve in which we expect the central bank to hike its policy rate by 100 basis points. These rate increases, starting with a 50 basis-point increase on Wednesday. will occur ... READ MORE >
Interest rate update: Confidence in the Fed, but uncertainty over long-term growth
The Federal Reserve has started to normalize interest rates, lifting the short-term transaction cost off the zero bound following two years of crisis policy. The result has been a 100-basis point increase in the yield on 10-year Treasury bonds, which have increased from just under 2% to nearly 3% in a ... READ MORE >
The illusion of inventory and price controls in the current economy
Systemic disruptions of supply chains over the past two years because of the pandemic and, more recently, the Russian invasion of Ukraine have renewed calls for political authorities to do something about soaring prices. With inflation standing at 8.5% and risks of another oil and energy price ... READ MORE >
Inflation marches higher, hitting 8.5% compared to a year ago
Long ago and far away, it was once taught that inflation has long and variable lags. That still probably applies when setting policy, managing a portfolio or making longer-term investments as top-line inflation jumped by 1.2% in March to 8.5% on a year-ago basis, according to government data released ... READ MORE >
FOMC minutes: Fed prepares to shift its policy normalization into a higher gear
The Federal Reserve is preparing to launch the next phase of its policy normalization by drawing down its balance sheet as soon as May to boost rates out along the maturity spectrum and to keep inflation expectations anchored, minutes of the Federal Open Market Committee’s March meeting show. That ... READ MORE >
U.S. March jobs report: American labor market remains red hot
The American labor market remains red hot as the employment-to-population ratio among prime-age workers surged to 80.0% in March, up from 79.5% in February, and total employment increased by 431,000 jobs. The unemployment rate declined to 3.6%, the Bureau of Labor Statistics reported on Friday. The ... READ MORE >
What is the yield curve telling us?
Fears of an imminent recession are somewhat overblown. These fears are showing up in fixed-income markets, where investors are betting that the risk of a recession is rising as the economy absorbs a supply shock in the commodity and energy markets and as central banks increase interest rates. But ... READ MORE >
That ’70s Show: Lessons from the oil shortages of nearly 50 years ago
The pandemic and Russia’s invasion of Ukraine have created the largest energy shock since 1979 and 1980. Since the start of the war in Ukraine, the price of gasoline has increased roughly 20%, and in Los Angeles, the average price for regular unleaded gasoline is $5.98 per gallon, according to the ... READ MORE >
FOMC’s policy decision: Rate hike, balance sheet reduction, revise down forecast, repeat
Policy normalization at the Federal Reserve took a giant step forward on Wednesday as the Federal Open Market Committee hiked the federal funds rate by 25 basis points to between 25 and 50 basis points while slashing its growth forecast and increasing its estimate of inflation. The announcement ... READ MORE >