Housing & Inflation Stats as Economic Debate Continues  #shorts #shortvideo #shortsfeed #foryou
Channel: Brain Wired Media
Date: 2023-02-25

This holiday-shortened week will see the government update a key inflation indicator and fourth quarter GDP, as well as private housing market data.

Statistics, mostly for January, are being released amid an economy that has been heating up more than expected and inflation that, while falling, is still beyond the Federal Reserve's target.

The Federal Reserve's last meeting minutes will be released Wednesday, indicating its current thinking.

It will show whether policymakers favored a half-point rise or the recent 25-basis-point cut.

In a Monday blog post, Wells Fargo managing director and senior economist Sam Bullard emphasized that policy observers will be paying close attention to the argument over the last meeting's federal funds rate hike.

As the Fed raised interest rates by 75 basis points, Wall Street firms like Goldman Sachs are predicting three more rate hikes, up from the market's two.

"In light of the higher GDP and firmer inflation news, we are adding a 25bp (basis points) rate hike in June to our Fed projection, for a peak funds rate of 5.25%-5.5%," Goldman Sachs economists led by Jan Hatzius said last week.

The likelihood of a recession has increased as government bond rates have reached their highest levels since 2007.

The property market, manufacturing, and Technology sectors have all declined, and layoff notifications are flooding in.

This week will be hectic for housing reports, with existing home sales data issued on Tuesday and new home sales data released on Friday.

Economists expect existing home sales to rise slightly and new home sales to dip month-to-month.

On Thursday, analysts will revise their fourth-quarter GDP growth projections to 2.9%.

The Federal Reserve Bank of Atlanta's GDP Now model predicts 2.5% first-quarter growth, up from 1.5% at the start of the year.

The Fed will focus on Friday's personal consumption report, which includes a price index.

January's Consumer Price Index is predicted to rise 0.4%, lowering the annualized rate to 4.3% from 4.4% in December.

Annual inflation is down due to dropping prices across the board, but monthly inflation is rising due to the steep drop in gasoline costs at the end of last year reversing.

The Federal Reserve is watching service sector inflation because increased demand for these goods and services has raised prices and service worker incomes.

Geopolitical events like President Joseph Biden's shocking cloak-and-dagger visit to Ukraine on Monday and Vladimir Putin's bellicose speech to the Russian people on Tuesday will cloud any projections.

Investors have noted China's openness to Russia and economic progress after COVID-19.

Finally, stock market dynamics. Several experts warn of a comeback if inflation and bond yields rise after the S&P 500 index rose 14% from its fall lows.

On Tuesday morning, BMO Family Office chief investment officer Carol Schleif said the market is "missing the point" that a strong economy and normalization of rates after an abnormal decade of zero interest rates is a long-term positive because it signals a healthier economy that doesn't need stimulus.

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