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? - 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%.
Economic Uncertainty Seems Removed Going Into The New Year 2020
Wells Fargo Economics & Financial Report / Dec 28, 2019
The U.S. economy continues to expand, albeit at a moderate pace. The U.S. Bureau of Economic Analysis reports U.S. gross domestic product (GDP) grew 2.1 percent in Q3/19.
This Week's State Of The Economy - What Is Ahead? - 01 May 2020
Wells Fargo Economics & Financial Report / May 04, 2020
U.S. GDP declined at an annualized rate of 4.8% in the first quarter, only a hint of what is to come in the second quarter.
This Week's State Of The Economy - What Is Ahead? - 21 October 2020
Wells Fargo Economics & Financial Report / Oct 21, 2020
Mobility is continuing to trickle lower in several major developed market economies. The U.K., France, Italy and Canada have all seen some further modest declines in retail/recreation visits.
This Week's State Of The Economy - What Is Ahead? - 18 August 2023
Wells Fargo Economics & Financial Report / Aug 23, 2023
The FOMC meeting minutes acknowledged the economy\'s resilience and continued to stress the Committee\'s resolve to bring inflation back down toward its 2% goal.
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? - 04 December 2020
Wells Fargo Economics & Financial Report / Dec 09, 2020
Manufacturing held up relatively well in November, despite a larger-than-expected dip in the ISM manufacturing survey. The nonfarm manufacturing survey rose slightly.
This Week's State Of The Economy - What Is Ahead? - 16 February 2024
Wells Fargo Economics & Financial Report / Feb 20, 2024
The out-of-consensus start to the year for economic data continued with a slip in retail sales and industrial production followed by a startling 14.8% drop in housing starts during January.
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? - 23 July 2021
Wells Fargo Economics & Financial Report / Jul 30, 2021
In the biggest financial news this week not connected to college football conference realignment, July\'s NAHB Housing Market Index slipped one point to 80.
