MA’s Ken Matheny was quoted in the article, The Fed raises interest rates again, saying ‘economy is doing well’ by Paul Davidson with USA Today. (excerpts shown below). “The Fed on Wednesday raised its benchmark short-term rate by a quarter percentage point to a range of 0.75% to 1% and stuck to its forecast of two more such increases this year and three in 2018. Some economists had expected Fed policymakers to modestly step up the pace. With the Fed more confident that inflation is moving higher, “It’s now going to switch to more regular, more predictable path of rate hikes,” says Ken Matheny, senior economist at Macroeconomic Advisers. (click here for article)
Monthly GDP declined 0.8% in January, setting up the first quarter for a soft reading. The sharp decline in January reflected declines in final sales and inventory investment. Within final sales, real PCE was weak, in large part reflecting a weather-related decline in consumption of electric and gas utilities. Also pulling down final sales was a sharp decline in state-and-local construction and a large increase in imports. Nonfarm inventory investment fell in February, the second consecutive decline following an elevated level in November. The level of GDP in January was 1.6% below the fourth-quarter average at an annual rate. Implicit in our latest forecast of 1.3% GDP growth in the first quarter is a sharp, 1.0% increase in monthly GDP in February and a solid, 0.3% increase in March. Click here for more information on MA’s Monthly GDP measure.