Yesterday, I discussed how the markets have remained relatively resilient in spite of recent volatility.
Tariff concerns, geopolitical tensions, earnings season and inflation have all weighed on US equities at different points throughout 2025, but one tailwind has remained constant: economic growth is — at least for now — solid enough.
Some economic data look really good. Manufacturing has been on the increase with both the Empire State Manufacturing Survey and ISM Manufacturing PMI coming in higher than expected.
The ISM Services PMI for January was a little lower than the December figure but still healthy above 50. The retail sales fell in January as expected, but remain within a Goldilocks’ range.
Initial jobless claims have increased only modestly in the last few weeks. Wage growth has begun to moderate and unemployment has been stabilized. As Powell stated, our labor market has stabilized. “solid.”
Conference Board predicts that the real US GDP will be 2.3% by 2025. This is a decrease from 2.8% for 2024. In the global context, this non-profit predicts that real GDP will grow by 3% in 2025.
“While the US economy is set to start 2025 on strong footing after a year of surprisingly robust growth, a combination of proposed policies will likely weigh on growth and leave inflation elevated as the year progresses, resulting in a more patient policy stance from the Fed,” In a recent statement, the Conference Board outlined its position.
What do all these things mean? I think it means the Fed just may be on track to achieve its coveted soft landing — that is if the data continues to reflect decent economic growth.
Chicago Fed president Austan Goolsbee stated a few months ago that his optimism is not diminished. “optimistic” What is a soft landing?
The minutes of the FOMC meeting held on March 23 (released yesterday) reveal that staff members are concerned about federal policy.
It is a good idea to use the word “you” when referring to someone. “continued to note elevated uncertainty regarding the scope, timing and potential economic effects of possible changes to trade, immigration, fiscal and regulatory policies,” Minutes read
Several staffers noted that the impact of trade and immigration on progress in inflation reduction could be significant.
Participants also suggested that it might be a good idea to slow down or pause the balance sheet until Congress passes a resolution on debt ceiling.
The pause in interest rate reductions will likely continue until there is a significant change to the economic situation.
“If labor market conditions deteriorated, economic activity faltered or inflation returned to 2% more quickly than anticipated,” Committee members will consider relaxing monetary policies.
In general, Powell’s minutes show what has been known ever since his last press conference. Officials have been on hold until the trend in inflation is lower.
However, the economic data remain unchanged. A soft landing remains possible unless there is a major drop in the growth rate.
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