Neil Irwin
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Fed’s fresh read on financial stability highlights “persistent inflation” — and its own monetary tightening — as a top tier risk.
also notice the massive slide down in the pandemic as a listed risk factor federalreserve.gov/publications/f…
Retweeted by Neil Irwin 
In @NewYorkFed Survey of Consumer Expectations:
1) The perceived odds the unemployment rate will be higher a year from now increased.
2) The perceived odds the respondent will lose their own job in the next year fell, matching series low.
¯\_(ツ)_/¯
newyorkfed.org/newsevents/new…
April homebuilder survey results are here. Top themes: 1) Demand is slowing, namely entry-level due to payment shock. 2) Investors are pulling back. 3) Ripple effect of rising rates starting to hit move-up market. Market commentary to follow…
Retweeted by Neil Irwin 
Fed governor Christopher Waller explains how the central bank fell behind:
-The Fed made assurances (called forward guidance) in late 2020 that conditioned removing stimulus on labor market gains
-The labor market was unusually difficult to forecast
federalreserve.gov/newsevents/spe…
Retweeted by Neil Irwin Gotta imagine some things start to crack in the housing market if these levels hold. twitter.com/calculatedrisk…
On one hand, quarterly productivity numbers are pretty meaningless, and this is just a residual of strong job growth + GDP contraction for idiosyncratic reasons.
On the other hand, yeeeesh. twitter.com/BLS_gov/status…
I think it’s striking—and an important contrast with the 1970s—the degree to which the Powell Fed is taking ownership of the inflation problem.
(Stick around for the self-pitying Arthur Burns content).
axios.com/2022/05/04/fed…
I'm surprised stocks are up so much in response to Powell taking 75bps off the table. Seemed to me that he basically affirmed the baseline of most mainstream Fed watchers (50 bps each the next couple of meetings) rather than sending some dovish signal.
I read a bunch of Arthur Burns speeches from the 70s when researching my book a decade ago, and one difference between then and now is that Burns was full of excuses for why inflation wasn't the Fed's fault, whereas Powell is owning the problem.
Can Biden/Congress do more to fight inflation?
Powell: We need to stay in our lane and do our job. When we get inflation back under control, maybe then I can give other people advice. Right now I’ll stick to doing our job.
Powell: "Broad sense on FOMC" that additional 50 bps rate increases should be on the table at next couple of meetings. Unusually specific.
Real first-day-of-school vibe at the ole Federal Reserve today. First in-person press conference in 2+ years, new room in newly renovated building.
Fed hikes half a point, anticipates that ongoing increases "will be appropriate."
Notes that COVID lockdowns in China are "likely to exacerbate supply chain disruptions."
axios.com/2022/05/04/fed…
Half a point rate increase, balance sheet runoff phasing in to $95bn/month by September
Which is to say, even if the reappointment politics made things awkward for Powell and Brainard, even the Esther Georges and Loretta Mesters of the world were not envisioning much in the way of 2022 rate hikes.
Regarding the Quarles comment that the White House's sluggishness around reappointment may have contributed to the Fed's slow move toward tightening, it's worth noting that at September FOMC, 9 officials saw no rate increases in '22 and none saw more than 2.
No sign of a slowdown in labor demand here: There were 11.5 million job openings on the last day of March, a record high.
Retweeted by Neil Irwin Just an extremely flat yield curve from 3 years all the way out to 30y. The 5/10 is actually slightly inverted at the moment.
Bloomberg reports that Japanese institutional asset managers are getting out of Treasuries, contributing the steep selloff over the last several weeks.
bloomberg.com/news/articles/…
10-year yields up another 10 bps today, almost to 3%. The financial market backdrop to the FOMC meeting Wednesday has changed a lot in the last two weeks, with significant tightening of financial conditions across the board.
Yields on 2-year US government bonds have now risen for 10 straight months, the longest such streak since we have data going back to 1976.
Retweeted by Neil Irwin It's 2022 and we still somehow lack the technology for airport bars to have a display with the precise boarding status of outgoing flights.
PCE inflation for March and Employment Cost Index for the first quarter due up imminently. Important inflation reads, all at once!
When it comes to dealing with inflation, CEO Tim Cook noted that while some component costs have increased, others are declining. "I think we are doing a reasonable job currently navigating what is a challenging environment," Cook said.
axios.com/apple-record-q…
Retweeted by Neil Irwin Core PCE inflation during the first quarter rose at an annualized rate of 5.2%, slightly below expectations of 5.5% (h/t @fcastofthemonth)
This suggests that either March core PCE will be lower than estimates of a 0.3% m/m gain *or* that Jan/Feb will be revised down.
Retweeted by Neil Irwin In summary, consumers did fine, businesses did fine, but some weird stuff happened with trade balances and inventories.
Strong business investment numbers too. Nonresidential fixed investment contributed 1.17 ppt to headline GDP, more than previous two quarters.
Personal consumption expenditures boosted GDP, and particularly showed clearly the pivot away from goods and toward services spending.
Trade the big culprit in the GDP decline. Subtracted 3.2 percentage points from headline. Strong domestic demand + slowing world economy is NOT GREAT for US GDP calculations.
First quarter GDP due up in three minutes! It's looking like a weak number (<1%) driven by inventories and trade, with stronger details on consumption and business investment beneath the hood.
Get ready for an awfully soft GDP report. Likely to show the slowest growth since the expansion began in mid-2020, and a negative number is plausible.
It's mostly due to inventories and trade, though, which don't tell us much about the future.
axios.com/gdp-report-slo…
Between balance of trade and inventory shifts, could be a nasty GDP number tomorrow morning. twitter.com/joebrusuelas/s…
S&P 500 down 2.6% today and 6.2% in the last week.
Do you check your 401(k) balance?
Lael Brainard will pass the Senate to be vice chair of the Fed (vote is ongoing).
Retweeted by Neil Irwin 2-year yield down 17bps today (!). Big time risk-off move, as investors rein in their anticipation of Fed tightening.
Gotta love the one (1) day in Washington spring when it is warm but not hot.
Dang, S&P 500 down 2.8% today.
Frankly, though, I thought it was weirder that stocks hadn't declined more in the last few weeks in light of the Fed's more aggressive tightening path.
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