The Federal Reserve looks like it’s finally getting what it really needs in its fight to tame inflation: a cooling in the red-hot labor market.
In just more than a week, US Federal Reserve Chair Jerome Powell has gone from expressing confidence that policy makers will be able to avoid pushing the economy into a recession while rapidly raising interest rates to control inflation to remarking, as he did on Thursday, that a downturn is out of the central bank’s control.
Savers are about to learn one painful and one surprising lesson about interest rates and banks. First, just because the Federal Reserve is raising rates doesn’t mean the rate investors earn on their cash will rise as much — if at all. In fact, the financial repression in the form of zero rates suffered for more than a dozen years by those who are ultra conservative with their savings isn’t going away soon.
The recession chatter has been building for a few weeks but really picked up on Easter Sunday, when Goldman Sachs Group Inc. chief economist Jan Hatzius published a report putting the odds of a recession at about 35% over the next two years. He noted that 11 out of 14 tightening cycles in the U.S. since World War II were followed by a recession within two years.
The S&P 500 Index officially fell into a correction on Tuesday, tumbling 10% from its record high on Jan. 3. The benchmark for U.S. stocks extended its decline on Wednesday, dropping as much as 1.8%. The word “correction” implies something was “wrong” with stocks.
The Federal Reserve, European Central Bank and others have created so much money to go along with unprecedented support from governments to combat the Covid-19 pandemic that the world is awash in liquidity.
When the going gets tough in the U.S., the tough go shopping. The Commerce Department said Wednesday that retail sales surged 3.8% in January, the most in 10 months and well above the 2% median estimate of economists surveyed by Bloomberg.
Of the many economic reports that the U.S. government puts out each month, the one looking at the number of homes on which builders have started construction doesn’t come close to matching the interest of investors, economists and politicians...
Economists are generally a “glass half empty” bunch. So while they cheered the U.S. Labor Department’s monthly jobs report on Friday, which showed the unemployment rate dipping to a pandemic-era low of 4.6%...