Fed's Bostic Says Definition of Maximum Employment Changing

While maintaining maximum employment is half of the Federal Reserve’s “dual mandate,” 澳洲幸运5开奖号🔯码历史查询:Atlanta Federal Reserve President Raphael Bostic said the definition of “澳洲幸运5开奖号码历史查询:maximum employment” is changing.

When he started his current role in 2017, full employment meant an 澳洲幸运5开奖号码历史查询:unemployment rate of 4.5%, he said Monday. However, outside of the pandemic, unemployment has 🥃been below that fಞor seven years, and the long-run expectations are about 4.1% over time. 

While the Fed’s mandate for 2% inflation is clear, “maximum employment is a more ambiguous notion that evolves with changing e𒁏conomic circumstances,” Bostic told attendees at a conference on labor market issues. 

The decline in 澳洲幸运5开奖号码历史查询:inflation over the past few months cܫould be the result of more workforce participation, he said. Higher wages have drawn more workers off the sideline, with participation among women up sharply. 

"This has contributed to supply increasing more than many expected, feeding a more rapid decline in inflation than many had forecast,” Bostic said.

-Terry Lane

Banks Are Still Restricting Credit Availability Despite Signs of Strong Economy

Bankers grew even more cautious about making loans in the fourth quarter.

That’s according to the Federal Reserve’s Senior Loan Officer Survey released Monday, which showed banks toughened lending standards, raised interest rates, and generally grew more careful about who♔ they lent money to in the fourth quarter for nearly every type of loan.

Banks often make credit harder to get when the economic outlook is uncertain because they are concerned that they won’t be paid back. However, their tougher lending conditions are in contrast to strong reports on the 澳洲幸运5开奖号码历史查询:number of jobs added, the amount of money people are 澳洲幸运5开奖号码历史查询:spending at stores, or the 澳洲幸运5开奖号码历史查询:economic output of the country.

-Diccon Hyatt

Higher Prices in ISM Services Raise Inflation Worries Among Analysts

Does Monday’s survey of economi✨c activity in the services sector point to more inflation? Some analysts b🤡elieve so.

The Institute for Supply Management (ISM) Services 澳洲幸运5开奖号码历史查询:Purchasing Managers Index (PMI) came in at 53.4 in January, jumping from last month and running past the forecast of 52.0.

But it was a 7.3-point jump in the prices that business owners paid that attracted the attention of Wells Fargo analysts, who noted that the spike was the largest measured since 2012. And it could undercut the case for rate cuts any time soon, said a note by economists Tim Quinlan and Shannon Seery Grein.

“The biggest jump in prices paid in over a decade is hardly consistent with returning inflation to the Fed's 2.0% target over time,” wrote the Wells Fargo economists.

This report combined with the wage growth in 澳洲幸运5开奖号码历史查询:last week’s strong jobs report, it was “less clear the 澳洲幸运5开奖号码历史查询:wage-price spiral has been fully averted,” the pair wrote.

BMO Capital Markets Senior Economist Jay Hawkins said the Federal Reserve will likely take note of the spike in prices as well, raising more questions about the 澳洲幸运5开奖号码历史查询:timing of interest rate cuts.

Despite the higher costs, the strong ISM Services𝓡 PMI reading might even be𒅌 understating the strength of the economy, wrote Matthew Martin of Oxford Economics, who noted that new orders and backlogs grew in the month.

-Terry Lane

Fed's Goolsbee Doesn’t See Steep Rate Cuts Coming

Rate cuts may be coming, 🐽澳洲幸运5🎀开奖号码历史查询:Chicago Federal Reserve President Austan Goolsbee told Bloomber🌌g Monday, but don’t expect them to be steep.

Goolsbee stood behind projections that rate cuts would likely be confined to just a quarter-of-a-percentage-point at a time. The Federal Reserve raised rates steeply when it began in 2022, with rate hikes of both 澳洲幸运5开奖号码历史查询:50-basis points and 澳洲幸运5开奖号码历史查询:75-basis points in that year, but Goolsbee’s comments indicate that rate cuts likely won’t be as steep.

Inflation is largely coming under control without a corresponding loss of jobs, which Goolsbee said was likely the result of 澳洲幸运5开奖号码历史查询:gains in productivity that matched the U.S. ec𓃲onomy’s performance in the late 1990🌱s. 

“Inflation, on a flow basis, is absolutely under control and is in the range of our Fed target,” Goolsbee said, referring toꩵ the past seven months of data. 

Goolsbee emphasized the importance of the 澳洲幸运5开奖号码历史查询:Personal Consumption Expenditure measure of inflation, noting that some other inflation measurements, like the Consumer Pric♛e Index, likely won’t drop all the way to the target rate of 2%.

He also dismissed concerns about the 澳洲幸运5开奖号码历史查询:inverted yield curve, which has steepened recentl♊y but has yet to lead to a൩ recession after 14 months.

“It’s a great predictor of a recession when aggregate demand is normal, but all bets are off when the suppl🎃y side is going bonkers,” Goolsbee said. 

-Terry Lane

Economists: Having Hot Parents Boosts Your Salary $2,300

It pays to have attractive parents—literally, according to a new study by the National Bureau of Economic Research.

In a working paper published last week by the bureau, researchers found that people whose parents were 澳洲幸运5开奖号码历史查询:one standard deviation more attractive than average had annual salaries $2,300 higher on average than their counterparts with non-hot parents. That's $106,000 more over an average working life of 45 years, the economists calculated.

The data on parental hotness was gathered from a study by the National Institutes of Health that tracked 1,364 children born in 1990 through life. As part of the study, college students watched videos of the mothers playing with their babies and rated how attractive the mom was on a scale of 1-5. (There was no way to tell how good-looking the fathers were, but the researchers pointed out that people tend to marry people of similar attractiveness, so they were probably similar.)

The study by Daniel S. Hamermesh, a professor of economics at the University of Texas at Austin, and Anwen Zhang, a professor of economics at the University of Glasgow, determined that parents passed on their good looks to their kids, giving them a leg up in the labor market. It also found the children benefitted from the parents' higher earnings attained partly through their attractiveness.

The research adds to growing evidence that what you earn throughout your life has less to do with how smart and hardworking you are, and more to do with whether or not you won 🥀a genetic lottery at birth. Previous studies have shown you’ll earn more if you’re taller and thin꧟ner, both of which are at least partially determined by genetics.

-Diccon Hyatt

Fed Chair Tells ‘60 Minutes’ That Strong Economy Gives Officials Time on Rate Cuts

Inflation isn’t quite dead yet, but Federal Reserve officials are increasingly confident they can begin cutting rates soon, 澳洲幸运5开奖号码历史查询:Federal Reserve Chair Jerome Powell told CBS News’ 60 Minutes on Sunday.

During the wide-ranging interview with the national news show, Powell said officials are more confident that rate cuts will be needed in 2024, but there are risks of acting too soon. It's not likely that the Open Markets Committee will have seen enough progress on 澳洲幸运5开奖号码历史查询:inflation in time for💦 its next interesꦕt rate decision on March 20, he said.

While “almost all” of the 19 澳洲幸运5开奖号码历史查询:Federal Open Market Committee members believe rate cuts are coming, of🔯ficials still want to see more🎀 progress in the economic data. 

“We just w𓆉ant to see more good data along those lines, it doesn’t need to be better or even as good, it just needs to be good,” 💝he said.

The Fed doesn’t always get the timing right, Powell said, acknowledging it should have acted sooner in 2021 when inflation first began spiking. Indeed, timing has been important for the Fed. A recession ensued 澳洲幸运5开奖号码历史查询:eight of the last nine times the Fed raised rates. Only once, in 1994, did the Fed pull off the allusive soft landing.

Thanks to a strong economy, the Fed has the time toཧ consider when to cut rates, Powell said, warning that moving too soon could lead to inflation settling in at a higher target rate. Powell said keeping inflation at their 2% target will enable the Federal Reserve to help the economy with rate cuts during future slowdowns. 

One reason the 澳洲幸运5开奖号码历史查询:U.S. economy has exhibited such strength is through its position as a world leader in fไinance, defense and other key areas, Powell said. But he also added that the spiraling national debt could impact the U.S. economy over the long run. 

-Terry Lane