The FOMC cut the funds rate today by 25bp to 4.0-4.25%. There was only one dovish dissent for a larger cut: 50bp from new governor Miran. Moreover, in the press conference Powell suggested 50bp wasn’t seriously entertained by the Committee. Unlike the last meeting, both Governors Bowman and Waller voted with the consensus this time. …
The administration announced new tariffs on April 2. Prior to this we estimate that the effective tariff rate—tariffs collected divided by goods imports—had already increased from 2.3% in 2024 to 10%. That is on a static basis, which assumes no changes in import composition. With the latest announcement that rate would climb to 23% when …
• The president’s recent comments about Fed Chair Powell raises risks of threats to Fed independence • Supreme Court precedent would appear to guarantee Powell’s job security • However, that precedent is currently being reviewed • If precedent is overturned and Fed independence is chipped away at, inflation and interest rates could move higher During the first Trump …
The president’s highly anticipated tariff announcement this afternoon delivered at the very hawkish end of the range of expected outcomes. Details are still hazy, but we understand that starting April 5 there will be a 10% minimum tariff on all good imports, and on April 9 tariffs will go up further on countries with which …
With the administration recently urging ICE to raise arrests to 3,000 per day we check in on the latest deportation trends and their implications for labor markets. While DHS has paused the publication of comprehensive monthly data, they are still reporting timely detention metrics, most easily available via the organization TRAC. These imply that arrest volumes in the interior of the …
The Fed held rates steady yesterday, as universally anticipated, with the 2025 median dot unchanged from June, still signaling one cut. For 2026, the median now projects zero cuts, down from one in June, with a lone cut eyed for 2027. The longer-run dot stayed put at 3.0%. The 2025 dot was marginally hawkish compared …
• Nonfarm payroll employment rose 151k overall and 140k private; private job gains are in line with trend but there were some other details in the report that were soft • The unemployment rate rose from 4.0% to 4.1% (4.14%) even while participation fell two-tenths of a percent • The workweek held at the cycle …
The minutes of the January FOMC meeting confirmed the message that Chair Powell gave at the January press conference and his subsequent Congressional testimony: that the Fed is in no hurry to cut rates further — but also retains its easing bias. The minutes revealed that participants saw the “current high degree of uncertainty” as …
January FOMC minutes reinforce a continued pause Read More »
In our 2025 Outlook we highlighted how strong consumer balance sheets have been supporting spending. While real PCE growth surged over 4% in 2H24, we look for consumer spending in 1H25 to normalize to above 2% given the still solid labor market. Rising delinquencies had led to some questions about the health of consumers, but …
In contrast with other January inflation data this week, import prices came in slightly softer than expected. The headline measure rose 0.3% last month, but unlike most other inflation data these are not released as seasonally adjusted. On a year-ago basis, import prices grew 1.9% in January, down from an upwardly-revised 2.3% in December but …
