Know What's Happening in US Economy
Know What's Happening in US Economy
U.S. equities fell sharply on Wednesday as the Federal Reserve kept its policy rate unchanged but highlighted persistent inflation, sending the Dow Jones down 1.6% to 46,224. Elevated producer‑price index numbers—0.7% month‑over‑month and 3.4% year‑over‑year—exceeded expectations, reinforcing concerns about price pressures. Higher crude oil prices lifted energy stocks, while a temporary suspension of the Jones Act aimed to ease oil logistics, and the Treasury approved a PDVSA transaction license. In parallel, cryptocurrency exchange Gemini plummeted after Citi downgraded the stock, cutting its target price and wiping out $134 million in market value.
"Our view is that an economy operating at a strong level, such as it is today, but which isn’t producing nearly enough labor demand should be signal enough to have the Fed cut rates a couple more times this year,...
The Cleveland Federal Reserve released a nowcast for March headline CPI that blends traditional CPI and PCE data with daily oil and weekly gasoline prices. Rising oil prices—Brent near $109 and gasoline at $3.72 per gallon—are pushing the nowcast upward....
The FOMC's forecast revisions were tiny compared to the images we're seeing from the Middle East.
Jerome Powell’s Wednesday press conference highlighted two core messages. First, the Federal Reserve is still waiting for tariff‑related price pressures to filter through the economy, a lag that officials hope will resolve around mid‑year. Second, Powell emphasized that it is...
Summary of Fed Chair Powell today: 1) He'll stay as Chair until a new chair is confirmed by Senate 2) He'll stay at Fed until criminal investigation is "truly over" 3) No rate cut today. Only 1 cut likely for 2026 4) No one...
Fed Chair Powell says we "just don't know" what impact of oil shock will be. "The standard learning is that you look through energy shocks, but that’s always been dependent on inflation expectations remaining WELL ANCHORED." "The US economy is doing pretty...
The Peterson Institute for International Economics released its spring 2026 Global Economic Prospects, outlining the latest outlook for the United States and major world economies. Karen Dynan warned that the ongoing Middle East conflict and volatile energy prices are tightening growth...
Those predicting the 2026 dot would rise to no cuts just didn't do the math. What did happen is the 3 Most hawkish reduced from a protest hike to a pause (less hawkish) 3 middle doves got modestly more hawkish And Miran the...
On Wednesday, the Federal Reserve left its benchmark interest rate unchanged at the 5.25%‑5.50% range, reaffirming its projection that rates will remain at this level through 2026. The decision followed a two‑day policy meeting marked by cautious deliberations but no...
Core PCE inflation has been marching upwards (>1% above target). Yet Fed officials are only inching up their forecasts (they're still offsides) No downside changes to u3 or output gap. Yet the Fed is still penciling in a cut for this year....
Take a look at the Fed's new projections: 1 rate cut in 2026 1 rate cut in 2027 Higher inflation forecast **Slightly higher GDP forecast** --> this signals they are NOT projecting "stagflation" Unemployment rate staying around the current level (4.4%) Bottom line: Fed currently signaling...
JUST IN: The Fed leaves rates unchanged (3.5 to 3.75%). **The projection is for 1 rate cut in 2026** 11 Fed leaders voted for this Only 1 dissent (Trump official Stephen Miran) The statement says: "The implications of developments in the Middle East...
Fed Chair Jay Powell fired a warning shot today, reminding the White House that he holds some pretty important cards. Yes, it's drama, melodrama and soap opera. But it also really matters. And I admire how Powell has handled himself here....
If you think demand played a large roll in the pandemic inflation, you are a lot less worried today. If you think it was mostly supply shocks, well you are more worried about supply shocks being inflationary. This explains some...
That was a hawkish presser. JP discounted the latest NFP print and revisions. Spent time discussing rate hikes even if hypothetical. Highlighted anchored inflation expectation as a prerequisite for further rate cuts.
Appreciate that Powell thinks that AI is inflationary on the margin as of now (because of capex etc)
Fed powell standing up to trump by refusing to cut rates during this oil crises.
Powell says he definitely would not use the word "certain" to describe his view on the onetimeness of the inflationary effect of tariffs
Would be neat if someone asks about whether the Fed has anything to learn from the RBA's recent pivot
The problem with dismissing all the shocks as "one-time things" is that they all have the same directional impact on inflation and underlying inflation was already running around 3%, which means that in practice you will never hit a 2%...
Odds of Powell leaving as governor just took a meaningful leg down after his comments: https://t.co/BAkNISx8fo
A propos of Powell's comments just now: non-housing services inflation versus ECI wage growth. You can see a bit of a wedge opening up, with nominal wage growth cooling while services inflation stays tenacious. https://t.co/WmtcQV5Cxr
the significant part is Powell's relatively lukewarm support for looking through energy prices. 5 years of missing their target is clearly bothering them. They are gonna need to see genuine economic weakness to cut again
Fed Chair Powell confirms he would stay on as Fed chair pro tem if Kevin Warsh isn't confirmed by the time Powell's term as chair ends. Also adds: "I have no intention of leaving the board until the investigation is...
Powell did not have a good answer to the question of why non-housing services inflation has been moving the wrong way if the job market is actually "not inflationary"
Powell: "You can characterize the rate as in the high end of neutral of you can characterize it as mildly restrictive, even modestly restrictive. It is somewhere around the borderline of restrictive and not."
The average 30-year fixed mortgage rate today: 6.31% Same day last year: 6.78% 10-year Treasury yield today: 4.25% Spread today: 206 bps
Interesting catch where Powell corrects himself from saying "weakness in the labor market" (objectively wrong) to "downside risk in the labor market" (maybe wrong but at least defensible)
Fed Holds Rates, now with Only 1 Dissenter, Sees Accelerating Inflation & GDP Growth. Dot Plot projections still point at 1 rate cut in 2026. Powell: “If we don’t see that progress [on inflation], then you won’t see that rate cut.” https://t.co/d1jJR0aFr2
Powell reiterates that the Fed "worries a lot" about inflation expectations becoming unanchored due to the multiple shocks over the last 5 years.
Powell embraces the SEP to observe that there was "a meaningful amount of movement" toward fewer cuts and then later leaves the SEP by the side of the road. If there was ever going to be a time to skip...
The Fed's stance appears to have changed very little. A simple interpretation: The Fed wants to wait and see what's happening in the Middle East. There's no point taking a strong view until reality becomes clearer. (Powell just described FOMC members...
Powell: if we ever were to skip an SEP (Summary of Economic Projections), this would be a good one. We just don't know. Um, the Fed does have the power to skip the SEP. But I gather it takes a new...
At the Fed press conference, Powell reflects some frustration that inflation hasn't moved more sharply toward target, as tariff-fueled prices are still working their way through the system. This is a moderately hawkish presser, for reasons that largely pre-date the...
Don't understand why another supply shock should affect the path of rates. Excessive focus on supply shocks as an explanation for pandemic inflation is a problem. Its causing excess fear from poliymakers today.
"The forecast is that we will be making progress on inflation...we should be seeing that" --Powell, on why there's a rate cut projected for this year
In response to a question from @colbyLsmith, Powell acknowledges that 5 years of missing the inflation target will help inform the degree to which the FOMC can look through the oil price surge.
Don't know why he said this, services inflation is also accelerating across a broad range of categories
Powell: "Near term measures of inflation expectations have risen in recent weeks likely reflecting the rise in oil prices causes by supply disruptions in the Middle East"
Powell just OMITTED this line about "disinflation in the service sector" (vs January press conference) https://t.co/knGJ2D4YW2
The Fed disagree with markets on this (and I largely agree). A supply shock -- especially one that doesn't really move core inflation -- should not automatically lead to higher rates. https://t.co/V0LS0P6sGE
Powell: "Job gains have remained low." "Labor demand has clearly softened as well." "The median projection of the unemployment rate is 4.4% at the end of this year." "Inflation remains somewhat elevated."
According to TSLombard, Trump’s numbers are horrible on just about everything, but on the economy it is looking really bad. More charts and graphs featured on today's Chartbook Top Links in the comment below. https://t.co/Ro8tuPfMZk
Last year markets sold off on less dovish than expected Fed. Today they find relief on less hawkish than expected.
It is (too) low. Guessing some of the Fed officials were not willing to fold in Feb CPI data into their projections. And certainly not today's PPI data
The distribution of the FOMC inflation outlook shifted to the right (higher) for 2026, 2027, and 2028 https://t.co/6hxNK4fUdP
Fed SEP shows a lot of optimism with GDP growth picking up, the unemployment rate coming down and inflation easing.
No change to the FOMC's short-run rate projections, but interestingly, median FOMC participant sees long-run growth now at 2% (up from 1.8% in December) and R* at 1.1% (up from 1%). https://t.co/dAHaot3Kk4
Insta-read #FOMC: No change in rates No change in '26 or '27 dots 1x dissent (slight hawkish) "Uncertain implications" of Iran Two-sided risk language
