Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

FOMC Meeting March 13, Fed Expected Stand Pat as U.S. Economic Recovery Remains Stable

Economics / US Economy Mar 13, 2012 - 04:55 AM GMT

By: Asha_Bangalore

Economics

Diamond Rated - Best Financial Markets Analysis ArticleIt is widely expected that the Fed will stand pat at the March 13 FOMC meeting. Nevertheless, the Fed’s view about the economy should reflect nuanced modifications, which will offer hints about the next policy step.

The key question is if there is a need for additional policy action to support economic growth. Incoming economic data present a mixed picture. The ISM factory survey shows continued growth but at a slower pace compared with readings of recent months. The composite index moved down to 52.4 from 54.1 and the index measuring new orders stood at 54.9 from 57.6 in January (see Chart 1). Factory production data for February are scheduled for publication on March 16.


On the labor market front, payroll employment rose 227,000 in February, with the three-month moving average at 245,000. The unemployment rate is holding steady at 8.3%, with an increase in labor force participation accounting for an unchanged jobless rate. Initial jobless claims continue to trend down. Charts 2-4 point to improving labor market conditions, but the unemployment rate remains at an elevated level after ten quarters of economic growth and the percent unemployed for six months and over is problematic (see Chart 5). The percentage unemployed for 27 weeks and over has declined to 42.6% in February from 45.5% in March 2011. However, from a historical perspective, the absolute level of long term unemployment remains a major area of concern. Bernanke indicated at the February 29 testimony that the “job market remains far from normal.”

Consumer spending has held steady for three straight months ended January, despite the jump in auto sales during two of these three months. Auto sales advanced in February also, estimates of consumer spending will be available later in the month. Chairman Bernanke noted that real household income and wealth of households held steady in 2011 to make a point that support for spending continues to remain weak.

In the housing sector, on the demand side, although houses are affordable, credit availability is tight and uncertainty about employment and the future path of prices is holding back home sales. On the supply side, inventories of unsold homes have dropped below the historical median, but roughly a third of home sales are distressed properties. The large number of distressed properties continues to exert downward pressure on home prices.

On the international front, exports have slowed as projected. Headwinds from Europe will prevail on the risk radar screen in the months ahead.

On balance, the economic scale has not tipped significantly in favor of immediate monetary policy easing since the last FOMC meeting. Bank credit, an important driver of our economic forecast has posted impressive growth in January and February. Continued growth in bank credit is supportive of self-sustained economic growth. But, the persistence of longer-term unemployment, the elevated unemployment rate, sluggish demand for homes, stagnant consumer spending, continued price home price declines, and headwinds from Europe are factors that will leave a bias toward monetary policy easing, with Fed ready to step in if the recovery falters. In addition, the looming Iran nuclear controversy with the risk of higher oil prices hangs like a dark cloud on the global economy. Stay tuned for tomorrow’s analysis of the FOMC policy statement.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

Copyright © 2012 Asha Bangalore

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in