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? - 13 September 2024
Wells Fargo Economics & Financial Report / Sep 17, 2024
The core Consumer Price Index (CPI) printed at 0.3% month-over-month in August. This was slightly higher than consensus forecasts and marked the fastest price increase in four months.
This Week's State Of The Economy - What Is Ahead? - 20 August 2021
Wells Fargo Economics & Financial Report / Aug 24, 2021
The Wells Fargo Economics team notes in the Commentary that new COVID cases in New Zealand disrupted the Reserve Bank of New Zealand\'s plan to tighten monetary policy this week.
This Week's State Of The Economy - What Is Ahead? - 27 May 2022
Wells Fargo Economics & Financial Report / May 29, 2022
it looks like higher mortgage rates are starting to have some effect on the housing market as April...
25 January 2021 Economic Outlook Report
Wells Fargo Economics & Financial Report / Jan 30, 2021
In the second installment of our series on economic risks in the foreseeable future, we analyze the potential for higher inflation in coming years stemming from excess demand.
This Week's State Of The Economy - What Is Ahead? - 29 May 2020
Wells Fargo Economics & Financial Report / May 30, 2020
The beginning of this week saw some optimism that the economic downturn could be relatively short-lived, but data through the rest of the week provided grim reminder of the economic damage from COVID-19.
This Week's State Of The Economy - What Is Ahead? - 17 March 2023
Wells Fargo Economics & Financial Report / Mar 21, 2023
Retail sales declined 0.4% during February, while industrial production was flat (0.0%). Housing starts and permits jumped 9.8% and 13.8%, respectively.
This Week's State Of The Economy - What Is Ahead? - 05 August 2022
Wells Fargo Economics & Financial Report / Aug 08, 2022
The Bureau of Labor Statistics reported this morning that nonfarm payrolls increased 528,000 for the month of July, easily topping estimates, lowering the unemployment rate to 3.5%.
This Week's State Of The Economy - What Is Ahead? - 25 February 2022
Wells Fargo Economics & Financial Report / Feb 27, 2022
What a crazy week. It’s hard to worry about something as relatively unimportant as economic trends when one thinks about what folks in Ukraine are enduring, but economies are nonetheless impacted.
This Week's State Of The Economy - What Is Ahead? - 09 October 2020
Wells Fargo Economics & Financial Report / Oct 12, 2020
Weekly first time unemployment claims highlighted an extraordinarily slow week for economic news. Jobless claims fell slightly but continuing claims fell by one million.
This Week's State Of The Economy - What Is Ahead? - 05 February 2021
Wells Fargo Economics & Financial Report / Feb 10, 2021
Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month\'s 227,000-job drop.