Weekly Technical Reviews

The first estimate of second quarter GDP was stronger than expected with growth pegged at 2.8% compared to 1.4% in the first quarter. After subtracting -0.42% from GDP in the first quarter inventories were rebuilt in the second quarter and added +0.82% to GDP. I discussed how a decline in...

Prior to an FOMC meeting the Federal Reserve’s staff compiles the ‘Beige Book’ for FOMC members. Each of the 12 Federal Reserve districts contacts businesses within their district for an assessment of the economy and gathers economic data pertinent to that district. That information is sent to...

In June the Headline CPI declined by -0.1% led by declines in Gasoline (-3.9%), Oil (-3.8%), Airline Fares (-5.7%), and a moderation in Shelter inflation from an increase of 0.4% in May to 0.2% in June. The decline in Shelter inflation brought monthly Core down to 0.1% from 0.2% in June. On a...

Services comprise 80% of GDP so changes in the level of growth in services will determine when and how much the economy slows. One month doesn’t make a trend but it can offer a clue. In June the ISM Services Index declined from 53.8 in May to 48.8 in June a rather large drop in one month....

Wall Street has been impatiently waiting for better inflation news and the May Personal Consumption Expenditures Index (PCE) delivered. The Core PCE only increased by 0.08% and the Headline was essentially flat (-0.01%). The takeaway values from May 2023 were 0.1% and 0.30% so Headline annual...

Flamingo’s can stand on one leg for a long time but the stock market can only manage that feat until there is a reason to sell. An absence of selling pressure and a positive fundamental narrative can stretch the market’s ability to stand on one leg. However, there are an increasing number of...

In the June 3 WTR I thought the Summary of Economic Projections for GDP, Unemployment Rate, and PCE inflation wouldn’t change much and that the yearend target rate for the Funds rate would be increased from the March SEP’s 4.6% “The FOMC updates its Summary of Economic Projections (SEP) every 3...

The headline proclaimed that 272,000 jobs were created in May which was 50% higher than the forecast gain of 180,000. Wages grew 0.4% in May and were up 4.1% from last year. The increase in the Unemployment Rate from 3.9% to 4.0% was easily dismissed in the face of stronger job growth. A look...

The second estimate for first quarter GDP was revised down from 1.6% to 1.3%. As in the first report GDP was held down by an increase in imports (-0.9%) and decrease in inventories (-0.5%). As I’ve discussed imports reflect demand that is satisfied by production overseas, which is why it is...

Many FOMC members have given speeches or interviews since the last FOMC meeting and the message has been fairly uniform. Paraphrasing: ‘ We’re not ready to cut the Funds rate until we have more confidence inflation will return to 2.0%, nor do we think there will be a need to increase the Funds...