Yellen Passes the Baton
The leadership of the nation’s central bank changed hands when outgoing Federal Reserve Chair Chair Janet Yellen handed the baton to incoming Federal Reserve Chair Jerome (Jay) Powell. Grant Thornton Chief Economist Diane Swonk explains what the change could mean for short-term interest rates in 2018.
Bloomberg that Yellen is “going out on a high note.” Diane also writes that Yellen “began her tenure with the Federal Reserve forecasting lower unemployment and stronger economic growth. Now that forecast is a reality. In response, Yellen was able to start the process of exiting crisis-era policies without disrupting financial markets.”
Hurricanes Topple Payroll Gains in September
Look for zero net new jobs for the month of September. Hourly employees who could not get to work because of weather conditions will show up in the monthly employment report as temporary job losses. The actual unemployment rate will not be affected. Labor economist Diane Swonk explains.
FOMC Signals December Rate Hike
Federal Open Market Committee (FOMC) members signaled a December rate hike in their updated forecasts for the September meeting. In addition, the FOMC lowered the consensus for the “neutral” fed funds rate to 2.75%. Thirdly, the Federal Reserve made the widely expected announcement to begin shrinking the massive balance sheet in October.
Housing Market Outlook
New construction is still not meeting the demand from entry-level home buyers. Diane Swonk explains why we are seeing this imbalance and the factors behind it.
Federal Reserve Minutes
Minutes from the July Federal Open Market Committee (FOMC)’s July meeting highlighted areas of division and agreement. Members are divided about when to raise short-term interest rates, but they agree that it is time to start slowly reducing the Fed’s massive balance sheet. One sign of leadership changes to come: Randal Quarles, who served at Treasury under former President George W. Bush, has been nominated to one of the open seats on the Board of Governors.
Consumers are spending more money this summer to travel and eat out at restaurants. Lower gas prices fuel driving vacations. Easier credit helps too, even benefiting traditional retailers who are growing their online business. Listen to Diane Swonk for details.