Fed not yet ready to conclude tapering discussion

A few regional Fed Presidents are pushing for the Fed to begin tapering its Treasury and MBS purchases sooner rather than later. But with Chair Jerome Powell recently arguing that the recovery is still “a ways off” from meeting the “substantial further progress” test, we don’t expect any new guidance on asset purchases at next week’s FOMC meeting.
Andrew Hunter Senior US Economist
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US Economics Weekly

Labour force exodus shows no sign of reversing

This week brought more news that acute labour shortages and the resulting surge in wages are rapidly feeding through into the most cyclically sensitive components of the consumer price index.

15 October 2021

US Data Response

Retail Sales (Sep.)

The 0.7% m/m rise in retail sales in September suggests goods spending held up a little better than we had anticipated, but real consumption growth still slowed sharply in the third quarter.

15 October 2021

US Economics Update

Deepening labour shortages point to lasting damage

The August Job Openings and Labor Turnover survey released yesterday added to signs that labour shortages are still getting worse at a time when many of the temporary factors that were supposedly holding back labour supply are easing. We’re getting more concerned that much of the drop in labour force participation will prove permanent, which is in turn a reason to expect the recovery in real activity and employment to disappoint over the coming years, while wage and price growth remain elevated.

13 October 2021

More from Andrew Hunter

US Economics Weekly

Democrats kick-start budget; Powell future uncertain

The Democrats’ $3.5trn budget proposal is only the first step in what could be a protracted negotiation to a final bill, which will be roughly fiscally neutral. Meanwhile, another dovish showing from Fed Chair Jerome Powell this week hasn’t prevented rumours circulating that he is set to be replaced when his term expires next year.

16 July 2021

US Data Response

Consumer Prices (Jun.)

The 0.9% m/m surge in both headline and core consumer prices in June was much stronger than we expected and illustrates that temporary supply bottlenecks stemming from the pandemic are still putting significant upward pressure on prices in some sectors. But the bigger concern is that inflationary pressures are also now clearly building in cyclically-sensitive sectors, which could prove longer lasting.

13 July 2021

US Economics Update

Surveys suggest labour shortages persist

In contrast to the stronger payrolls figures released last week, the latest survey data suggest that labour shortages remain acute. That supports our view that the acceleration in employment growth in June probably wasn’t a sign of things to come and suggests that wage growth is set for a further acceleration.

7 July 2021
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