Wednesday's FOMC rate decision was the headline economic news this week. As widely expected, the Committee raised the target range for the fed funds rate by 75 bps for the third consecutive time. Updated forecasts were released as well, with inflation expected to remain well above the Fed's 2% target for longer than previously published in June. As such, the median projection for the year-end fed funds rate rose a full percentage point (pp) for 2022 and increased 0.8pp for 2023. Real GDP growth projections were also slashed for this year and next, while unemployment is expected to be higher. On balance, the meeting underpinned the FOMC's firm commitment to do whatever it takes to bring inflation back down to earth. See Interest Rate Watch for more detail.
The rapid rise in the fed funds rate (the upper bound sits at 3.25%) has put pressure on interest-rate sensitive sectors. Housing, in particular, has faltered as mortgage rates have climbed. The NAHB/Wells Fargo Housing Market Index (HMI), a measurement of home builder sentiment, slid three points to 46 in September—the ninth straight monthly decline. Notably, an HMI reading below 50 indicates that more builders report conditions as "poor" than those who see conditions as "good."
The skid in builder sentiment mirrors the trend decline in home construction. Total housing starts surprised to the upside in August, increasing 12.2% over the month. Single-family starts rose 3.4% and multifamily starts increased 28%. Improving supply chain conditions likely increased building material availability during the month, allowing builders to move forward with projects already in the pipeline. Meanwhile, building permits, a forward-looking indicator that leads housing starts by a couple of months, plummeted 10% in August. The drop in permits reflects the ongoing trend of builders tapping the brakes on construction in response to weaker demand and rising financing costs.
This Week's State Of The Economy - What Is Ahead? - 21 April 2023
Wells Fargo Economics & Financial Report / Apr 26, 2023
The Leading Economic Index (“LEI”) continued to flash contraction as early signs of labor market weakening are starting to emerge. Meanwhile, a batch of housing data confirmed that a full-fledged housing market recovery is still far off.
This Week's State Of The Economy - What Is Ahead? - 20 March 2020
Wells Fargo Economics & Financial Report / Mar 21, 2020
Daily life came to a screeching halt this week as governments, businesses and consumers took drastic steps to halt the COVID-19 pandemic.
This Week's State Of The Economy - What Is Ahead? - 06 May 2022
Wells Fargo Economics & Financial Report / May 18, 2022
Unlike Yordan Alvarez, no one is expecting the Fed to stand back and admire their handiwork after this weeks 50 basis point increase in the Fed Discount Rate. Similar to Yordan, their effort is more of a single and not a home run.
This Week's State Of The Economy - What Is Ahead? - 10 November 2022
Wells Fargo Economics & Financial Report / Nov 11, 2022
Relief in October inflation gives the FOMC the ability to slow the pace of rate hikes ahead. But make no mistake, the Fed\'s job of taming inflation remains far from over.
This Week's State Of The Economy - What Is Ahead? - 25 November 2020
Wells Fargo Economics & Financial Report / Nov 28, 2020
It may be a holiday-shortened week, but there have been as many developments and economic indicators packed into three days as we can recall seeing in any other week this year.
This Week's State Of The Economy - What Is Ahead? - 23 September 2020
Wells Fargo Economics & Financial Report / Sep 22, 2020
European activity is surging. Germany and Italy are leading the way, but France is close behind despite an ongoing rise in cases. The Google data are a bit outdated, but are hard to reconcile with today’s weak Eurozone services PMI figures.
This Week's State Of The Economy - What Is Ahead? - 28 April 2023
Wells Fargo Economics & Financial Report / May 03, 2023
U.S. Economy expands but at a weak rate. Regional bank failures cause corporate investment spreads to widen again. House Republicans pass bills that affect the debt ceiling.
This Week's State Of The Economy - What Is Ahead? - 09 April 2021
Wells Fargo Economics & Financial Report / Apr 10, 2021
This week\'s economic data kicked of with a bang. The ISM Services Index jumped more than eight points to 63.7, signaling the fastest pace of expansion in the index\'s 24-year history.
This Week's State Of The Economy - What Is Ahead? - 06 August 2021
Wells Fargo Economics & Financial Report / Aug 16, 2021
Back to the economy, issues with supply constraints remains a broken-record reference, but data this week highlighted the economy\'s resilience in spite of those continuing problems.
This Week's State Of The Economy - What Is Ahead? - 03 June 2022
Wells Fargo Economics & Financial Report / Jun 08, 2022
While talk of recession has kicked up in recent weeks, the majority of economic data remain consistent with modest growth.
