Economic Take

The Fed said last week it expects growth to settle down to a trend-like pace and that unemployment will stabilize. What explains all the concern out there where the Fed sees no issue?

Will the recent spike in gas prices and other commodities set back the post-pandemic economic recovery? There’s good reason to think we’ll be able to ride this one out.  

The economic numbers we talk about are seasonally adjusted, smoothing out the natural ups and downs of a calendar year so we get a clearer picture. But since the pandemic, it’s getting tricker to tell what’s a standard seasonal swing or a COVID curveball.

The current geopolitical crisis will slow growth by a couple percentage points. But the drag caused by rising energy prices will be heaviest for regions of the globe that depend on imported fuel.

Concerns that rising labor costs could be inflationary are misplaced because wages move in concert with other factors—many of them decades in the making.    

The Federal Reserve has clearly communicated its goals for months. So why hasn’t it changed course in the face of the latest inflation readings?

A peculiar thing happened in January’s jobs report. The labor force grew by 1.4 million, but after an annual population adjustment, the labor force actually contracted. Why does BLS change the measurements, and how does that affect the way we look at trends?  

The upcoming rise in interest rates has the markets unsettled. But the Federal Reserve’s plans are colored by a bullish view of the economy’s growth, not a hawkish outlook wary of an economic downturn.    

With the Fed already starting to pull back from pandemic supports, interest rates are expected to climb in 2022. While that may dampen mortgages, enough other changes over the past few years should leave housing in a healthy place. 

When it comes to inflation, it takes two to tango—aggregate demand and aggregate supply. Comparing prices to the pre-pandemic world of 2019 tells a remarkably different story than a one-year lookback. 

In our 2022 Business Leaders Outlook survey, we found that business leaders across the U.S. have a rosy view of the year ahead. While pandemic-driven challenges linger, they’re not really getting in the way of growth and profits.

It may not feel like it with the market trending down in the last month, but in 2021 we witnessed a remarkably fast economic recovery. And there’s good reason to be upbeat for 2022.

The economy is expected to grow steadily in 2022, but there are a few reasons that shouldn’t worsen current pricing pressures.    

The Fed’s ultimate goal of stable inflation requires aggregate demand to align with aggregate supply. That hinges on the supply of labor, and unemployment is the best measure of that alignment.

Even though we know the culprit behind inflation, we’re still susceptible to superstition. We tend to link inflation headlines with monetary and fiscal policy actions. Jim debunks a few popular misconceptions about recent Fed activity.