Macro and Markets
We're doing the dirty work of translating CPI to PCE in real-time for you. We'll be back on Thursday to provide an update after the PPI release, which will inevitably reshape the nowcast. The associated heatmaps are somewhat dense and intense: they give a holistic view
We'll have our usual monthly inflation preview soon, but for those curious, here's a bit of a preview to the preview... We all should take heart in how 2022H2 highlighted the possibility and plausibility of a 'soft landing'—disinflation without more unemployment—at odds
What the data tells us to expect for Friday: * Interpreting nonfarm payroll employment numbers will be messy due to the benchmark revision: The BLS folds in more comprehensive data each February on job creation. That can be especially substantial at the sectoral level and recast what the true employment trajectory
Summary: Today's FOMC Statement and press conference shows high continuity with the thinking reflected in the December FOMC meeting. The Fed does not appear to be impressed by the deceleration in wage growth in 2022H2 enough to explicitly rethink the inflation, unemployment, or interest rate outlook right now.
Energy price volatility, which may be with us for quite some time as we pursue decarbonization, is one of our nation’s greatest macroeconomic threats.
What to Expect: 1. The Fed will step down from their breakneck pace of 75 basis point hikes to a still very brisk 50 basis point pace of hikes. 2. FOMC members are likely to signal that the peak Fed Funds Rate will be above 5%, likely in the target
Summary 1. Friday's Q3 ECI release showed a modest slowdown in the pace of wage growth. Coupled with what we already knew about Q3 employment growth, we are continuing to see a slower—though still highly respectable and resilient—pace of gross labor income growth (~6.1% annualized
As of the first quarter of 2022, we have effectively recovered the jobs and wages lost to the pandemic-induced recession.
If we are trying to describe the nature of the real constraints that the economy has been facing over the past 6-12 months, we need a richer economic vocabulary than one that reduces every inflationary constraint to a domestic labor constraint.
