Jim Welsh's Contributions

After the FOMC lowered the Funds rate by 0.50% at the September 18 meeting Wall Street quickly jumped on the 0.50% bandwagon and expected the FOMC would deliver another large cut at the meeting on November 6 or at the December 18 meeting. There were a number of reasons why this was unlikely....

Wall Street was expecting an increase of 150,000 jobs for September but was surprised when the actual number came in at 254,000. Other aspects of the report were positive as the Unemployment Rate dipped from 4.2% to 4.1% and, for the first time this year, the previous two months were revised up...

In coming months the pace and size of rate cuts will be totaling dependent on future economic data. In his post FOMC press conference Chair Powell made this point clearly. “In considering additional adjustments to the target range for the federal funds rate, the...

Although I was surprised that the FOMC lowered the Funds rate by 0.50% at the September 18 meeting, I didn’t think another 0.50% cut would happen at the November 7 or December 18 meetings as noted in the September 23 WTR. “ The FOMC voted to lower the Funds rate by 0.50% at the September...

In 1973 Miller Brewing ran its first “ Tastes Great! Less Filling !” commercial, which over time highlighted various sports luminaries and were fun to watch. At the September 18 meeting the FOMC provided their version. The FOMC...

William Dudley served as president of the New York Federal Reserve from January 27, 2009 until June 17, 2018. The president of the New York Fed gets to vote at every FOMC meeting while the other 11 district presidents rotate with 4 voting for one year. As such the New York Fed President is...

In July the labor market softened notably with job growth falling to 114,000 from 179,000 and the Unemployment Rate jumping from 4.1% to 4.3%. My guess was that the labor market would show some improvement in August as noted last week. “ I think the larger risk is that the Unemployment Rate...

Chair Powell and members of the FOMC aren’t as unnerved by the increase in the Unemployment Rate from 3.4% in April 2023 to 4.3% in July, since it wasn’t due to a large increase in layoffs. As noted in the August 5 WTR, Chair Powell knows that some of the increase in the Unemployment Rate from...

The Path of Monetary Policy

Travel is the embodiment of discretionary spending and it provides a reflection of how people feel about their personal finances and the economy. In 2019 (pink line) 2,500,000 people were traveling leading up...

Since 1998 the S&P 500 has moved by more than 1.0% in the week after the Jackson Hole speech by the Chair Person of the Federal Reserve. In 2024 the S&P 500 rallied by 1.28% to 5641.82 after Chair Powell’s speech before closing with a gain of 0.96%. The 1.0% move on Friday by the S&...

Since 1981 the Federal Reserve of Kansas City has hosted the annual confab for central bankers at Jackson Hole Wyoming. Members of the Federal Reserve will be joined by leaders of the European Central Bank, Bank of England, and Bank of Japan. This year’s topic is “ Reassessing the Effectiveness...

In the hours before the stock market opened last Monday (August 5) the S&P 500 futures were down 250 points and there were vocal calls for the FOMC to lower the Funds rate immediately since the ‘sky was falling’. If the FOMC didn’t lower the Funds rate immediately it should lower it by 0.50...

During the press conference after the July 31 FOMC meeting Chair Powell did his best to avoid providing any hint about a rate cut at the September meeting as I suggested last week. “ Based on Chair Powell’s statements I think Chair Powell will avoid providing any hints since he doesn’t want to...

In the 1954 movie “ The High and the Mighty ” a flight from Honolulu to San Francisco loses one of the four engines and the loss of gas. The engine crisis occurs just beyond the point of no return. The point of no return is where the option to turn back is no longer...

The first estimate of second quarter GDP was stronger than expected with growth pegged at 2.8% compared to 1.4% in the first quarter. After subtracting -0.42% from GDP in the first quarter inventories were rebuilt in the second quarter and added +0.82% to GDP. I discussed how a decline in...

Prior to an FOMC meeting the Federal Reserve’s staff compiles the ‘Beige Book’ for FOMC members. Each of the 12 Federal Reserve districts contacts businesses within their district for an assessment of the economy and gathers economic data pertinent to that district. That information is sent to...

In June the Headline CPI declined by -0.1% led by declines in Gasoline (-3.9%), Oil (-3.8%), Airline Fares (-5.7%), and a moderation in Shelter inflation from an increase of 0.4% in May to 0.2% in June. The decline in Shelter inflation brought monthly Core down to 0.1% from 0.2% in June. On a...

Services comprise 80% of GDP so changes in the level of growth in services will determine when and how much the economy slows. One month doesn’t make a trend but it can offer a clue. In June the ISM Services Index declined from 53.8 in May to 48.8 in June a rather large drop in one month....

Wall Street has been impatiently waiting for better inflation news and the May Personal Consumption Expenditures Index (PCE) delivered. The Core PCE only increased by 0.08% and the Headline was essentially flat (-0.01%). The takeaway values from May 2023 were 0.1% and 0.30% so Headline annual...

The expert and you are in a car and the expert is driving. After awhile, you notice that the expert is driving the car by looking through the rearview mirror. Concerned you ask him why he’s not looking ahead as he drives. He replies...