Insights

(Printable PDF) The One Certainty This Year Is… Uncertainty. It would be wonderful to say that the economy started 2025 with a bang, setting the stage for another year of solid performance. Sadly, that’s not the case, as key data on activity weakened and inflation jumped in January. Happily, one-month

(Printable PDF) A Bifurcated Economy On the surface, the U.S. economy is strong. GDP growth is near its short-run potential, unemployment is low, consumers are spending, and manufacturing is coming back to life, spurred by AI-related spending on structures and equipment. Based on the strong performance of all key indicators

(Printable PDF) New Year, New Challenges The Federal Reserve cut interest rates for the third time in its three-month-old easing cycle that started with a robust half-point reduction in September. The latest quarter-point cut won’t be the last, according to predictions made at the December 17-18 policy meeting. The question

(Printable PDF) American Exceptionalism Should Endure Reflections on the U.S. elections are ongoing and will likely dominate the media for some time to come. That said, the polls are closed, and all eyes are focused on what the ramifications of the incoming Trump administration will be for the U.S. economy.

(Printable PDF) Despite External Shocks, The Economy Is In Good Shape Once again, reports of the recovery’s imminent demise are premature. Just as the seasons change, so do perceptions of the economy’s health. In the waning days of the summer, things looked dire indeed. The job market was sputtering, consumers

(Printable PDF) The Economy Exits The Fast Lane The U.S. economy is going through a transition phase and is settling into a more sustainable pace of growth, with next year being decent but unspectacular. The probability of entering a recession in 2025 is considered low, but not zero. Some of

(Printable PDF) Rate Cuts Are On The Way For the first week of the month, it looked like we were entering the time-honored “dog days of August”, that foreboding mindset people get when they feel stuck in the mud and sense that things just aren’t going right. The first inkling

(Printable PDF) Mission Accomplished? In the spring of 2022, the Federal Reserve embarked on a mission to wrestle inflation under control without cratering the economy. At the time, the Fed’s preferred inflation measure, the core Personal Consumption Deflator, was increasing at a 5.5 percent rate and the unemployment rate stood

(Printable PDF) The Wait Time for Rate Cuts is Getting Shorter It’s a long way to Christmas, but with a nod to that beloved holiday ballad, it’s beginning to look a lot like a soft landing. Federal Reserve Chair, Jerome Powell, may soon be singing the praises for the way

(Printable PDF) Perception Versus Reality For economists and policy makers, waiting for inflation to subside is like waiting for Godot. But that time may finally have arrived, as the consumer price index rose less than expected in April. It was the first time this year that inflation did not surprise

(Printable PDF) Sticky Inflation Keeps Rates Higher for Longer Has the Fed thrown in the towel? That’s the question investors are grappling with; and those who think they know the answer are being deceived. At the start of the year, the odds-on bet was that the central bank was poised

(Printable PDF) Noisy Data Complicates Fed Policy With a presidential election looming, geopolitical tensions escalating, and a central bank considering a major shift in its policy stance, 2024 looks to be an eventful year with a wide range of possible outcomes. So far, the financial markets are taking a “what,

(Printable PDF) No Rush to Cut Rates January tends to be an ornery month for economists, and the calendar did not disappoint this year. In the closing months of 2023, it appeared that a Goldilocks economy was unfolding, one that featured a cooling, but still solid, pace of economic activity

(Printable PDF) No Quit in This Economy 2023 ended on a high note, punctuated by sharp rallies in both the stock and bond markets, tangible evidence that the economy is on a steady disinflationary growth path, and strong indications that the Fed is poised to cut rates in 2024. The

(Printable PDF) The Case For Lower Rates The era of low rates ended in March 2022 when the Federal Reserve started the most aggressive rate-hiking campaign in a generation, lifting its policy rate 11 times from near zero to a range of 5.25-5.50 percent in July of 2023, where it

(Printable PDF) Higher Speed Limit Slows Inflation The holiday shopping season has officially kicked off, and while some have predicted a less festive Santa might have been coming down the chimney, the nation’s collective stockings will not be filled with coal. Consumers have not yet zipped up their wallets and

(Printable PDF) The Great Divide Between Feelings And Behavior The American public may not be feeling better about things, but economists clearly are. Most households think the economy is going in the wrong direction, and consumer confidence in one prominent survey is currently at recession levels. To be sure, there

(Printable PDF) Year-End Shocks and High Rates Heighten Recession Risk As expected, the Federal Reserve held rates steady at the September 19-20 policy meeting, following 11 hikes over the last 18 months that lifted short-term rates from near zero to a range of 5.25-5.50 percent. The jury is still out

(Printable PDF) The Economic Engine is Running Out of Fuel Economists are sounding ever-more like Gilda Radner of Saturday Night Live fame, claiming “never mind” about their recession call of a few months ago. What’s behind their mea culpa? Well, the economy for one thing. The drumbeat of stronger-than-expected data