Financial market participants and observers greeted the jobs report for June with enthusiasm. The 206 thousand increase in employment, shown in the chart below, was coupled with a 54 thousand downward revision to employment gains in May. Many analysts saw this as a gradual slowing in hiring. Moreover, the unemployment rate climbed higher in June to 4.1 … Continue reading Has the Labor Market Returned to Balance?
Did the May CPI Seal the Deal for Fed Rate Cuts?
The CPI for May prompted euphoria in financial markets and restored expectations of rate cuts by the Fed in the months ahead — the first in September and another by year-end. The S&P 500 stock index rose nearly 1 percent on the day and tacked on another ¼ percent gain the following day. May CPI … Continue reading Did the May CPI Seal the Deal for Fed Rate Cuts?
Back On The Soft Landing Path?
The April CPI numbers were in line with the expectations of market participants. This inflation news seemingly confirmed to market participants that underlying inflation is in the process of falling — after three consecutive months of unwelcome upside surprises. Moreover, other news on the economy was viewed as suggesting that growth has slowed, the labor market has … Continue reading Back On The Soft Landing Path?
The Remaining Inflation Problem
The release of CPI for January again dashed optimism for continued disinflation and near-term rate declines by the Fed. Now, market participants foresee the Fed’s first cut in rates coming around mid-year instead of the spring and the cumulative cut in rates of 75 to 100 basis points in 2024 (100 basis points equal one … Continue reading The Remaining Inflation Problem
Further Disinflation?
Economic growth over the second half of 2023 was brisk. Real GDP expanded at a 4 percent annual rate over the second half of 2023, up from a 2 percent rate in the first half and only ¾ percent over all of 2022. Moreover, initial claims for unemployment insurance thus far in January are not … Continue reading Further Disinflation?
Thomas D. Simpson, PH.D. 