This Week's State Of The Economy - What Is Ahead? - 04 November 2022

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Nov 07, 2022

This Week's State Of The Economy - What Is Ahead? - 04 November 2022

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? - 28 February 2020

The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation.

This Week's State Of The Economy - What Is Ahead? - 17 July 2020

Two countervailing themes competed for attention this week in financial markets. The first is that for the most part, economic data continue to surprise to the upside and do not yet rule out prospects for that elusive V-shaped recovery.

This Week's State Of The Economy - What Is Ahead? - 20 May 2022

U.S. retail sales topped expectations in April, while industrial production also grew more rapidly than economists expected. Data on housing starts, home sales and homebuilder sentiment, however, showed tentative signs of cooling.

This Week's State Of The Economy - What Is Ahead? - 22 July 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? - 05 February 2021

Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month\'s 227,000-job drop.

This Week's State Of The Economy - What Is Ahead? - 06 March 2020

An inter-meeting rate cut by the FOMC did little to stem financial market volatility, as the number of confirmed COVID-19 cases continued to climb.

This Week's State Of The Economy - What Is Ahead? - 27 August 2021

In other economic news, output continues to ramp up across the U.S., even as the resurgence in COVID cases is leading to some pullback in consumer engagement.

This Week's State Of The Economy - What Is Ahead? - 12 August 2020

The consumer has been a bright spot in the recovery so far, but with jobless benefits in flux and no clear path for the long-awaited stimulus bill, the support here could fade.

This Week's State Of The Economy - What Is Ahead? - 01 July 2022

As with the Mets and Yankees when they ran into the Astros over the last couple days, consumers staying power is showing signs of running out as inflation persists and confidence moves sharply lower.

This Week's State Of The Economy - What Is Ahead? - 14 January 2022

As you may have already seen, inflation is running almost as hot as the stock of our favorite bank. The Consumer Price Index (CPI) rose 7.0% year-over-year in December, the fastest increase in nearly 40 years.


Instagram

@ tcgcrealestate

Subscribe Now! IT's Free

Stay up to date with all news coming straight in your mailbox.

Copyright © 2022 TC Global Commercial. All rights reserved.