In what was a widely anticipated decision, the FOMC elected to lift the target range for the federal funds rate 75 bps at the conclusion of its November policy meeting this week to a range of 3.75%-4.00%. We analyze the meeting in more detail in this week's Interest Rate Watch section. In short, we think the FOMC is prepared to slow the pace of tightening at future meetings, though it is not done tightening yet. The risk of not tightening enough and inflation becoming entrenched outweighs the risk of over-tightening. We still anticipate the FOMC will deliver a 50 bps rate hike in December, though the size of the hike depends largely on the incoming data. Specifically, the November employment report and two CPI reports released before the next policy meeting on December 14.
The October employment report closed out the week and showed employers continued to add workers at a rapid clip. Employers added 261K net new jobs in October, beating the consensus expectation for a 195K gain (chart). This also came on top of some upward revisions to past data, but the fever still looks to be breaking on hiring with the three-month average pace of hiring falling to the slowest pace since the start of 2021. Job gains were fairly broad-based across sectors, and the report is still consistent with a tight labor market, which we think reinforces the idea the FOMC will keep tightening policy.
We look for job growth to moderate further over the coming months. Job openings pressed higher in September, though month-to-month movements tend to be volatile. Most measures, including the job opening rate, hiring plans and the PMI employment sub-components, indicate demand for labor is topping out. But with hiring still solid to date, the FOMC continues to largely have cover to focus primarily on inflation. We'll get the consumer price data for October next Thursday and expect prices rose 0.6% over the month. Please see our Domestic Outlook section for more detail on our expectations for next week's release.
This Week's State Of The Economy - What Is Ahead? - 27 January 2023
Wells Fargo Economics & Financial Report / Jan 28, 2023
Real GDP expanded at a 2.9% annualized pace in Q4. While beating expectations, the underlying details were not as encouraging. Moreover, the weakening monthly indicator performances to end the year suggest the decelerating trend will continue in Q1.
This Week's State Of The Economy - What Is Ahead? - 03 February 2023
Wells Fargo Economics & Financial Report / Feb 04, 2023
During January, payrolls jumped by 517K, the unemployment rate fell to 3.4% and average hourly earnings rose by 0.3%. The FOMC raised the fed funds target range by 25 bps to 4.5%-4.75% this week.
This Week's State Of The Economy - What Is Ahead? - 22 July 2022
Wells Fargo Economics & Financial Report / Jul 27, 2022
July\'s NAHB Housing Market Index dropped 12 points to 55, the second largest monthly decline on record behind April 2020\'s pandemic-induced collapse.
This Week's State Of The Economy - What Is Ahead? - 22 January 2021
Wells Fargo Economics & Financial Report / Jan 23, 2021
Housing starts jumped 5.8% during December. Single-family starts soared 12%, while multifamily starts dropped 13.6%.
This Week's State Of The Economy - What Is Ahead? - 01 December 2023
Wells Fargo Economics & Financial Report / Dec 05, 2023
U.S. data released this week indicates the economic expansion remains alive even as inflation continues to slow. The year-ago rates of headline and core PCE inflation were the lowest since March 2021 and April 2021, respectively.
This Week's State Of The Economy - What Is Ahead? - 27 March 2020
Wells Fargo Economics & Financial Report / Mar 28, 2020
The U.S. surpassed Italy and China with the most confirmed cases of COVID-19. Europe is still the center of the storm, with the total cases in Europe’s five largest economies topping 230,000.
This Week's State Of The Economy - What Is Ahead? - 17 September 2021
Wells Fargo Economics & Financial Report / Sep 23, 2021
While we were picking up tree limbs from the yard, data released this week generally showed a stronger economy in August than many expected in the wake of surging COVID cases.
This Week's State Of The Economy - What Is Ahead? - 27 October 2023
Wells Fargo Economics & Financial Report / Nov 02, 2023
The U.S. economy expanded at a stronger-than-expected pace in Q3, with real GDP increasing at a robust 4.9% annualized rate.
This Week's State Of The Economy - What Is Ahead? - 06 December 2019
Wells Fargo Economics & Financial Report / Dec 07, 2019
The latest hiring data are an encouraging sign that the U.S. economy is withstanding the global slowdown and continued trade-related uncertainty.
This Week's State Of The Economy - What Is Ahead? - 17 February 2023
Wells Fargo Economics & Financial Report / Feb 20, 2023
Inflation in the U.K. receded for the third straight month in January, with the headline rate coming in at 10.1% year-over-year. In bad news, this is still five times the Bank of England\'s 2% target.
