October 12, 2020 — Years of Low Rates are Hampering the Recovery

OCTOBER 12, 2020 – YEARS OF LOW RATES ARE HAMPERING THE RECOVERY Last week, Boston Fed President Eric Rosengren expressed concern, saying years of low interest rates led to excessive risk taking in commercial real estate and will make the current economic downturn worse.  He is expecting defaults and bankruptcies that will exacerbate the unemployment problem. Rosengren feels regulators should …

October 5, 2020 — Economic Data: the Good with the Bad

OCTOBER 5, 2020 – ECONOMIC DATA: THE GOOD WITH THE BAD Consumer confidence surged in September, its highest level since March.  Since the consumer is the driving force behind the US economy, higher confidence makes it more likely people will start spending, rather than saving, and the economy will pick up.  It’s felt there is a pent up demand for …

September 28, 2020 — Fed’s Bullard Optimistic for the Rest of 2020

SEPTEMBER 28, 2020 – FED’S BULLARD OPTIMISTIC FOR THE REST OF 2020 James Bullard, the president of the Federal Reserve Bank of St. Louis, spoke at a webinar last week, where he said he expects “outsized growth” in the third quarter of this year and a “full recovery” in the US is possible by year end. He believes monetary and …

September 21, 2020 — FOMC Meets; Interest Rates Flat Through 2023

SEPTEMBER 21, 2020 – FOMC MEETS; INTEREST RATES FLAT THROUGH 2023 The Fed has decided to keep monetary policy loose for the immediate future. Their new approach is not concerned inflation will surge. Over the last few years, inflation has not reached the targeted 2 percent, and annualized, in July, it was 1 percent. The FOMC’s views are reasonable, as …

September 14, 2020 –CPI Increases 0.4 Percent in August

SEPTEMBER 14, 2020 – CPI INCREASES 0.4 PERCENT IN AUGUST The consumer price index rose 0.4 percent last month, with rises in the price of gasoline, recreation, household furnishings and used cars being the primary contributors.  In the running 12-months, CPI is now up 1.3 percent after increasing 1.0 percent in the 12-months through July. The data beat economists’ expectations …

September 8, 2020 — US Government Debt Exceeds Size of the Economy

SEPTEMBER 8, 2020 – US GOVERNMENT DEBT EXCEEDS SIZE OF THE ECONOMY U.S. government debt is on track to exceed the size of the economy for the 12 months ended September 30, a milestone not hit since World War II, as a result of the coronavirus pandemic.  The federal debt held by the public is projected to reach or exceed …

August 31, 2020 — The Fed Approves New Strategy for Interest Rate Changes

AUGUST 31, 2020 – THE FED APPROVES NEW STRATEGY FOR INTEREST RATE CHANGES The Fed has dropped its longstanding practice of pre-emptively raising interest rates to control inflation, which will likely leave borrowing costs very low for a long time.  The change will not affect current policy, as the practice has been used without being formally defined.  Fed Chairman Powell …

August 24, 2020 — Jobless Claims Rise Last Week

AUGUST 24, 2020 – JOBLESS CLAIMS RISE LAST WEEK After falling for three consecutive weeks, jobless claims rose again to over one million.  The week before was the first time in 21 weeks that initial claims fell below 1 million.  The rise in claims, week over week, was modest, but indicates the return to a stable economy will not be …

August 17, 2020 — Fed Reduces Bond Buybacks as Market Stabilizes

AUGUST 17, 2020 – FED REDUCES BOND BUYBACKS AS MARKET STABILIZES The Fed has halved its corporate bond spending as the markets have stabilized to levels close to pre-pandemic pricing.  The daily rate of purchases has slowed to $12 million daily, from $24 million per day a week ago, and $300 million in the early days.  Last week, the Fed …