Log In to The Paramus Post - Greater Paramus News and Lifestyle Webzine

Please enter your user name and password below.

No Account Yet? Sign Up!

The Paramus Post - Greater Paramus News and Lifestyle Webzine
Friday, August 26 2016 @ 03:57 PM EDT

Retail Sales and the Fed


It's been a light week thus far in terms of economic data. This morning's sales report is the first of a few key reports scheduled for release over the next two days. Retail sales are expected to rise 0.6% in May after a minimal 0.1% rise in April.

Those calling for 4% GDP in the near term are looking for a resurgence in spending this month, otherwise the economy will be struggling to reach 2% in the current quarter. Keep in mind, however, even with a 4% rise in Q2, coupled with first quarter's one percent drop, the economy would remain in the stagnant 1.5-2% range of the last several years.

Tomorrow, both the headline and core PPI are expected to rise 0.1% in The big news of course is next week's FOMC meeting with a press conference scheduled after the statement release for added excitement. Recall at Yellen's first press conference following the March FOMC meeting, there was a bit of confusion when the chairman attempted to quantify "extended" period as perhaps as short as six months. This time around no doubt Yellen will be better prepared and less likely to make a similar type mistake - not impossible but less likely.

The market is widely anticipating no change in rates and a continued reduction in monthly bond purchases by $10bn. We agree. Given the recent improvement in the data relative to the start of the year, there is ample justification for the Fed to continue along their taper path.

That being said we do not expect much change in the statement save a slightly increased assessment in current conditions with a recognition of uneven spending activity.

We expect the Fed to continue to reiterate their commitment to accommodation, highlighting the still ample slack in the labor market.

Although the improvement as of late was a welcomed reprieve from the weakness at the start of the year, the relative improvement has not been enough to reverse the downward trend in consumption and investment. Furthermore when it comes to the labor market headline job creation has been notably improved but the lackluster composition of jobs continues to keep wage pressures at bay, a presumed prerequisite for the first Fed rate hike. In other words, the relative rebound is enough to keep the taper in tact but it hasn't been enough to sway the Fed from its accommodative path.

-Lindsey Piegza

 


by Mel Fabrikant

Mel is a longtime Paramus resident and has belonged to many Paramus organizations. He is responsible for bringing the Scholarship Show to town and seeing to it that the initial presentation went over well. His five offspring were brought up through the Paramus school system. In addition, he is a longtime Paramus Rotary member.

Share It!

Comments are closed
Paramus Post Media Kit Download

Trinity Presbyterian Church
Join the purpose driven church exercising faith, hope, and love because nothing else matters...
www.TrinityFamily.org
Spivak Lighting
Lamp Repairs, Chandeliers, Track Lighting, Outdoor Lamps, Recess Lighting, Paddle Fans, Consultation
www.spivaklighting.com
StoneMicro Web Technologies
Dynamic Website Development, Content Management System, Blogs, Web design, Web hosting services
www.StoneMicro.com
Sponsor ParamusPost