Fiscal policy will also likely see significant adjustments in the coming year, the nature of which will depend upon the outcome of the election.
Economics Watch
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Economics & Business
Economics Watch: Federal Reserve Signals Rate Cuts Likely in September
by Henry WillmoreAnother round of better-than-expected inflation data over the course of July has pushed the Federal Reserve to signal that it will cut the Fed funds rate at its next policy-making meeting on September 18.
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Economics & Business
Economics Watch: The Fed Gets the Inflation News It Has Been Waiting For
by Henry WillmoreUnexpectedly high inflation readings during the first three months of this year threw a wrench into the Federal Reserve’s plans to ease monetary policy. The data from April and May have been much more favorable. They have provided reassurance that inflation is indeed on a downward trajectory.
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Investors, both domestic and international, have been extremely bullish on America so far this century. More recently, they have been bullish about a small number of companies that happen to be domiciled in one country.
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The inflation data during the second half of last year were in various ways too good to be true. The unsustainably good inflation news during the second half led to excessive optimism in the markets…
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Economics & Business
Economics Watch: Fed Funds Rate Higher for Longer Still Looking Like the Right Call
by Henry WillmoreOne of the themes that emerged in the first half of last year about the Fed Funds Rate was the expectation that inflation and interest rates would persist at higher levels than anticipated.
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Economics & Business
Economics Watch: The Realities of Market Optimism in the Wake of Positive Economic Data
by Henry WillmoreIn light of increasingly favorable economic data, it may seem strange to ask what could go wrong. As recent years—and history going much further back—have shown many things could go wrong.
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Usually, tightening of monetary policy of the magnitude seen in the past two years results in a substantial correction in asset prices. Some ups and downs notwithstanding, this has not happened in this cycle.
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Inflation has slowed considerably this year but remains significantly above the Federal Reserve’s 2% target. Nevertheless, the Fed appears to be ready to declare victory.
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GDP (Gross Domestic Product) grew a robust 4.9% in the third quarter of 2023. This included a 4.0% increase in real consumer spending and a 3.9% gain in residential investment, the first increase since the first quarter of 2021.
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Economics & Business
Economics Watch: Financial Conditions Have Eased in Spite of Fed Tightening
by Henry WillmoreThe Fed’s program of tightening monetary policy has yielded an unusual development, the easing of financial conditions since last fall.
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Economics & Business
Economics Watch: The Fed Funds Rate, What’s Next?
by Scott Cullenby Scott CullenAssessing economic uncertainties complicates the Federal Reserve’s task in getting a handle on the Fed Funds rate.
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Economics & Business
Economics Watch: Inflation and Stagnation, Cause for Concern?
by Henry WillmoreIn his latest Economics Watch column, Henry Willmore looks at inflation, wages, changes in the labor market, and issues in the banking sector and how the Fed is dealing with these issues.
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Inflation slowed from the first half to the second half of 2022, both in price and wage inflation, which is good news for the Federal Reserve. However, a closer look at the data suggests that some of the drop was an unwinding of unusual price increases in the first half of the year.
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Economics & Business
Economics Watch: Changing International Trade Patterns Complicate Economic Outlook for 2023
by Henry WillmoreOne of the legacies of COVID-19 has been substantial disruptions to international trade patterns. This continued to play out in 2022 and complicates the outlook for 2023…
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After sluggish growth in the first three quarters of 2022, consumer spending appears to have accelerated in the fourth quarter. This is not entirely surprising. Some of the headwinds…
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Some important leads and lags will affect the Consumer Price Index (CPI) and other measures of inflation over the next year. One is that between spot natural gas prices and electricity…
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For a time, markets and asset prices proved surprisingly resilient in the face of the Federal Reserve’s efforts to cool off the economy. However…
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Much depends on what happens with the GDP. The Commerce Department’s initial estimate for second-quarter GDP revealed a 0.9% decline. This followed…
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An increasing number of factors indicate that the economy is slowing. The Federal Reserve’s Open Market Committee (FOMC) announced a 0.75% increase…
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Look for an increase in the federal funds rate for the remainder of 2022. The Federal Reserve’s Open Market Committee (FOMC) announced…
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Bubbles or unsustainably high valuations in financial assets played key roles in two recent recessions. The “dot-com” bubble in technology stocks contributed to the recession…
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Inflation has increased significantly in the past year. To understand whether this acceleration will be transitory or enduring, it is necessary to investigate the various sources of inflationary…
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Economics & Business
ECONOMIC MATTERS: LABOR AND HOUSING MARKETS RESHAPED BY COVID
by Henry WillmoreThe economy is inherently cyclical. And there is an epidemiological cycle associated with COVID-19. These two types of cycles are creating unusual dynamics for the economy…
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Economics & Business
Economic Matters: 2021’s First Half Economic Momentum Continues
by Henry WillmoreAfter posting gross domestic product (GDP) in the U.S. growth of more than 6% and consumer spending up over 11% in the first half of 2021, the economic data for July points toward the economy…
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