Federal Reserve enacts fifth rate hike of the year. Following accelerated core CPI inflation and ongoing above-average hiring last month, the Federal Reserve raised the overnight lending rate 75 basis points at its September meeting. This is the third consecutive rate hike of this magnitude, extending the target range of the federal funds rate above 3 percent. September also marked an increase in the level of Fed balance sheet reductions, to an estimated $95 billion… Read More

Pair of drivers back positive retail momentum. Store-based retail sales, which exclude automotive and gas purchases, as well as those made online or at bars and restaurants, ascended to a record mark in August. Much of this gain, however, was likely driven by rising prices, as inflation has sustained levels above 7 percent so far this year. Nevertheless, even after adjusting for inflation, core retail sales are up nearly 19 percent from the pre-pandemic tally,… Read More

Headline and core inflation trend in opposite directions. In August, the headline Consumer Price Index recorded a year-over-year increase of 8.3 percent, slightly below the 8.5 percent rise recorded the month prior. The core CPI measure, excluding food and energy, advanced at a faster pace, however, ascending 6.3 percent year-over-year in August compared to 5.9 percent in July. This dichotomy is due to the influence of a sharp drop in gasoline prices on the headline… Read More

Last month’s employment report ideal for Fed objectives. Employers added 315,000 personnel to payrolls in August, below the 526,000 jobs created in the previous month, but well above historical averages. The month-over-month hiring slowdown, together with a slight increase to unemployment, lowers the likelihood of a 75-basis-point rate hike at the next Federal Reserve meeting in favor of a smaller margin. The central bank is still likely to raise the overnight lending rate at least one… Read More

Dual factors lift sales. Accelerated hiring and lower prices at the gas pump aided spending in July, with core retail sales now up 29 percent relative to pre-pandemic. The addition of 528,000 positions last month pushed the U.S. employment base beyond the previous February 2020 level, while the Consumer Price Index was unchanged on a month-over-month basis, aided by a 7.7 percent decrease in gas prices. These factors helped offset the impacts of historically low… Read More

Inflation trend may be turning corner. The headline Consumer Price Index in July was up 8.5 percent compared to a year prior, a deceleration from the 9.1 percent year-over-year jump recorded in June. This slowdown was driven predominantly by a month-over-month decline in energy prices, led by a 7.7 percent drop in the gas price component of the index. The costs of other items, most notably food, continued to rise however. Setting aside energy and… Read More

Hiring accelerates in July, underscoring labor market strength. Concerns over the economy’s trajectory, following the reporting of GDP contractions in the first two quarters, may be somewhat assuaged by the robust jobs figures posted for July. Last month employers created 528,000 positions, the second-highest total for the year and a 32 percent increase over hiring in June. These new hires bring the total employment base back to the February 2020 level, with additional private sector… Read More

GDP contracts, but other economic indicators in the green. Real gross domestic product declined at an annualized rate of 0.9 percent in the second quarter, following the 1.6 percent decrease posted in the opening three months of the year. While two consecutive quarters of falling GDP is considered by some to be the technical signal for a recession, the actual state of the economy is more complex. The April to June GDP drop was predominantly… Read More

Sales indicative of transitionary period. Consumers continue to spend more than they did before the health crisis, with core retail sales in June up nearly 27 percent relative to pre-pandemic. Potential oncoming headwinds are starting to emerge, however, which is shifting shopping preferences. Last month, inflation surged 9.1 percent year-over-year as food prices rose 10.4 percent annually. This escalation is weighing on consumer confidence, which fell to its lowest level since February 2021, and shifting… Read More

High inflation persists, but pressure may ease. The Consumer Price Index advanced 9.1 percent year-over-year in June, its fastest pace since November 1981. Accelerated inflation was predominantly driven by higher energy and food prices. Excluding those two categories, core CPI inflation was 5.9 percent last month, a slowdown from the March high of 6.5 percent. While a widespread shortage of raw materials, finished goods and labor continue to push up prices, some relief may be… Read More