The American labor market remained red hot in January and that strength will stimulate a discussion of faster interest rate hikes by the Federal Reserve at its March meeting. The net increase of 467,000 in total employment on the back of a significant upward revision to the December estimate, from ... READ MORE >
Joseph Brusuelas
The Real Economy, Volume 86: How the Fed is managing its dual mandate
Download the full report. The Federal Reserve faces a difficult task in fulfilling the two mandates it has been given by Congress: Achieving full employment while keeping inflation in check. In this month’s issue of The Real Economy, our chief economist, Joe Brusuelas, examines how the Fed, with ... READ MORE >
Acceleration of wage increases raises caution flag for policymakers
Friday’s report that the Employment Cost Index had increased at the fastest pace in decades confirmed that the Great Resignation is bolstering the bargaining power of workers. The wage component of the index has now accelerated from a 2.5% rate of increase in the third quarter of 2020 to 4.2% a ... READ MORE >
RSM US Manufacturing Outlook Index: Omicron’s dampening effect
The RSM US Manufacturing Outlook Index receded again in January, providing another indication of the direct effect of the omicron variant on the business community and a sign of the eventual moderation of the post-crisis surge in growth. While the manufacturing sector continued to grow, the ... READ MORE >
U.S. jobs preview: Stick a giant omicron asterisk on the January report
The omicron variant has almost surely created significant distortions in the American workforce that will become evident when the jobs report for January is released on Friday. Investors, policymakers and firm managers should essentially write off the report as a one-time set of noise that will not ... READ MORE >
Monetary and fiscal policy in a changing economy: Reflation, and the risks that remain
This is the last in a series of articles regarding monetary and fiscal policy as the economy restarts within a changing framework of labor force choices, automation and pricing. The first article examined the Fed’s challenge in meeting its mandate for full employment. The second looked at the Fed’s other ... READ MORE >
U.S. GDP increases 6.9% in fourth quarter
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 ... READ MORE >
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 ... 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 ... 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 ... READ MORE >