The Fed Sees A Soft Landing Coming into Focus

If the Federal Reserve’s latest economic projections are anything close to accurate, the U.S. economy is set to recover from a bout of high inflation without a recession and mass unemployment.

Federal Open Market Committee members🎀 think the economy will avoid an economic crash as it comes down from the high inflation that flared up in 2൩021 as the economy reopened from the pandemic, according to economic projections they released Wednesday.

When each member of the 19-person committee was polled about the future of key economic indicators, the median answers projected the economy would grow faster, and unemployment would staꦉy lower than their previous estimates in December.

🎃 The median GDP growth estimate for 2024 rose to 2.1% from 1.4%, and the projection for unemployment fell to 4% from 4.1%, with similarly upgraded forec📖asts for 2025 and 2026 as well. 

All of those numbers are in line wit𝔉h a healthy economy, not one that’s in a recession.

Read more about the projections here.

Federal Reserve Could Ease One Of Its Anti-Inflation Policies 'Fairly Soon'

Trying to predict what the Federal Reserve is going to do involves a lot of interpretation.

Wednesday’s post-FOMC announcement press conference gave Fed watchers a new riddle to ponder: When is “fairly soon?”

In his press conference Wednesday, Fed chair Jerome Powell gave that deliberately vague timeline for the central ban𝔍k to start easing its quantitative tightening.

澳洲幸运5官方开奖结果体彩网:Quantitative tightening (QT) is one of the tools in the Fed’s anti-inflation playbook. When the pandemic hit, the Fed bought trillions of dollars worth of securities from financial markets, pouring money into the system and spurring activity to keep the economy afloat during the pandemic. After inflation flared up in 2021, they did the opposite, selling off those securities or letting them mature, taking money out of the marketplace to cool the economy and inflation.

Easing quantitative tightening would involve selling those assets—mortgage-backed securities and treasurys—at a🧔 slower pace than in recent months.

“While we did not make any decisions today on this, the general sense of the committee is that it will be appropriate to slow the pace of runoff fairly soon,” Powell said at the Wednesday press conference. “The decision to slow the pace of runoff does not mean that our balance sheet will ultimately shrink by less than it would otherwise, but rather allows us to project the ultimate level more gradually.”

Powell also said slowing the pace of tightening will reduce the possibility of stress on markets, hopefully helping to facilitate the soft la♍nding the Fed has⛎ been looking for. 

Economists said Powell’s comments indicate the Fed may taper quantitative tightening before🍒 they cut their influential fed funds rate, possibly as soon as their next meeting in May. 

“We also keep our call for an announcement of tapering in May with an♔ end to balance sheet runoff at year-end,” wrote economists at Bank of America after the meeting. “The risk to our view is that they start the rate cut cycle later and start taper later. Upcoming inflation data will be an important determinant of what comes next.”

Leading Economic Indicators Move Higher for First Time in Two Years

The Conference Board’s澳洲幸运5官方开奖结果体彩网: Leading Economic Index (LEI) moved higher in February, the first time in two years that the predictor of future business cycles moved higher. 

Manufacturing hours worked, stock prices, credit availability and residential construction helped push the leading economic index to 102.8. The report had negative aspects, with consumer expectations and new orders trending lower, while firms’ outlook for near-term growth 🦂remained negative.

“Despite February♌’s increase, the Index still suggests some headwinds to growth going forward,” the report said.

-Terry Lane

Average Mortgage Rates Continue to Waver Just Below 7%

Average mortgage rates on 30-year fixed loans continue to seesaw just below 7%, ticking up this week to 6.87%, accordꦛing to Freddie Mac.

While that number is up from last week, mortgage rates on a typical loan have hovered between 6.60% and 7% since the beginning of December. The average mortgage rate is still down from the peaks hit꧋ in the fall but is still at a more than two-decade high.

Earlier in the day, existing home sales ticked up for Feb꧑ruary, but the uptick in mortgages since then may reverse that trend, economists said.

"February's upturn is an encouraging sign that the resales recovery is underway. That noted, mortgage rates have ticked higher in recent weeks, which means further progress in the near term will likely be limited by affordability constraints," wrote Wells Fargo Economists Charlie Dougherty and Patrick Barley.

U.S. Business Activity Growing on Stronger Manufacturing PMI

On the back of stronger manufacturing, business activity in the U.S. grew in March, although the pace slowed from previous months, according to the S&P Global Flash U.S. 澳洲幸运5官方开奖结果体彩网:Purchasing Managers Index (PMI) for March.

While the index dipped slightly to 52.2 in March, manufacturing PMI ticked up to a 21-month high. Meanwhile, U.S. services activity fell �✅�to a three-month low of 51.7.

“澳洲幸运5官方开奖结果体彩网:Business activity in the U.S. continued to increase solidly at the end of the first quarter of the year, although growജth ticked down from that seen in the previous survey period,” the report said.

The S&P report also found that price pressure picked up in March, with the costs that firms pay reaching a six-month high, while service providers reported higher operating costs associated with larger wages. It led companies to raise their selling prices, S&𝄹;P Global reported.

“The 澳洲幸运5官方开奖结果体彩网:rate of inflation was the sharpest in just under a year and stronger than t⛎he series average,” the report said. 

-Terry Lane

Home Sales Rallied In February Amid More Homes For Sale

An uptick in for-sale inventory was just the jolt the housing market needed to get moving again.

Sales of existing homes jumped 9.5% in February, to a seasonally-adjusted annual rate of 4.35 million, the fastest pace of sales since March 2023, the National Association of Realtors said Thursday. The second increase in as many months blindsided forecasters who had expected a slight downturn, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.

There were 1.07 🌠million homes for sale, the most for any February since 2020.

" Existing home sales have made strong strides so far this year, with February seeing the biggest jump in 12 months," wrote BMO Economics' Priscilla Thiagamoorthy. "With the Fed on track to cut rates this year, it looks like the resale market is breaking out of its deep slide that commenced at the start of 2022 when the central bank embarked on its aggressive tightening cycle.

 Read more about the current state of the housing market here.

This entry has been updated to include comments from an economist.

Switzerland's Central Bank Cut Rates—How Is Their Economy Different From the US?

Switzerland's central bank became the first to cut interest rates Thursday.

The Swiss National Bank lowered its main policy rate by 25 澳洲幸运5官方开奖结果体彩网:basis points to 1.5%, which surprised some market watchers. Switzerland's easing comes a day after the 澳洲幸运5官方开奖结果体彩网:Federal Reserve held rates steady and the 𓆉same day the Bank of England kept its interest rate unchanged.

So why is Switzerland the first to cut rate♍s in this era of inflation?

Inflation in Switzerland didn't grow as rapidly as it did in the U.S. and England during the recovery from the pandemic-induced downturn. Inflation grew 2.1% last year in Switzerland, while 澳洲幸运5官方开奖结果体彩网:prices increased 2.6% over the year in the U.S. and 4% in England.

The Swiss government also expects inflation will decline to 1.5% this year, while yesterday's Fed projections showed officials expect inflation to move down to 2.4% in the U.S. this year.

The Swiss National Bank also has taken a different approach during this inflationary period. While the Fed raised rates 5 percentage points over the course of roughly a year and a half, Switzerland raised rates 2.5 percentage points in a year. This will be the first cut the Swiss centra🔯l bank has m🎀ade in nine years.

Read more about Switzerland's cut here.

Despite Dip, Philadelphia's Manufacturing Outlook Remains Positive

澳洲幸运5官方开奖结果体彩网:Manufacturing in the area covered by the 澳洲幸运5官方开奖结果体彩网:Philadelphia Federal Reserve dipped in March but﷽ outlook remained positive as shipments and new orders moved higher.

The index for manufacturing activity moved lower by two points to 3.2 in March, showing a positive response for the second consecutive month. It’s only the fifth p🦄ositive monthly reading in nearly two years for the Philly Fed’s Manufacturing Business Outlook Survey, which covers Delaware, parts of Pennsylvania and New Jersey. Negative readings imply tha🌱t manufacturers have soured their outlooks.

Meanwhile, new orders turned positive for the first time since October, rising more than 10 points to 5.4, while shipments hit their highest levels since⛦ August 2022.

The survey also showed a significant drop in 🌳prices paid by firms, with the index falling 13 points to its lowest reading since May 2020. Firms also reported lowering prices for thꦇe goods they produce.

This data is in line with manufacturing in other parts of the country. Last week, the New York Fed also 澳洲幸运5官方开奖结果体彩网:reported a drop in manufacturing in its region.

-Terry Lane

Fewer People Are Applying For Unemployment Than Economists Expected

Yesterday Federal Reserve Chair Jerome Powell said he was watching the number of people applying 𒐪for unemployment insurance claims for the first time, and last week that number fell again.

About 210,000 people applied for unemployment in the week ending March 16, lower than the 213,000 the economists expected. After revisions of the prior week's data, that's down 2,000 people.

Powell said the Fed is watc﷽hing the labor market closely, including the count of those filing for unemployment insurance, and has not yet found cause for concern.

"Initial claims are very, very low and if anything, they've tracked down a little bit," Powell said in his press conference yesterday after the meeting.

Th﷽e number of claimsꦓ is historically low and on par with where they were before the pandemic.

However,🀅 the four-week moving average, which economists often look to as the less volatile meaꦰsure, increased to 211,250, up 2,500 from the prior week.