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<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In March, the Fed dependent data reported no rise rates for the year due to tighter financial conditions and geopolitical concerns abroad.Since then, the data show that the economy is evolving as expected, with a & nbsp;March Report on Jobs& nbsp; (dispelling worries about a & nbsp;low february) and an impression of GDP that made the US economy grow at an estimated 3.2% in the first quarter. "data-reactid =" 16 "> In March, the data-dependent Fed announced that there would be no further rate hike for the year following tightening Financial conditions and geopolitical concerns abroad: since then, the data show that the economy is changing as expected, with a robust March employment report (which calls into question the concern over a weak February) and a GDP footprint that made the economy US economy grew above average 3.2% in the first quarter.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The number of the top line easily erases the expectations for 2 , 3% growth, & nbsp;propelled by higher investment in private stocks, net exports and local and state expenditures. "data-reactid =" 17 "> Turnover figure easily erased from growth forecasts of 2.3%, driven by increased private investment in inventories, net exports and local government spending and States.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But any concern about an economy overheating was tempered by a low reading of inflation; the main index of personal consumption expenditure, the Fed's preferred measure of inflation, rose by 1.3%, which is disappointing.The Fed has & nbsp;still underestimated of its 2% inflation target& nbsp; and cited insidious inflationary pressures as a reason for stopping for the moment on rate hikes. "data-reactid =" 18 "> However, worries over the overheating of the economy were tempered by a low reading of inflation, the essential personal consumption expenditure index, a preferred measure of the economy. Fed inflation has risen 1.3%, disappointing. The Fed has always underestimated its 2% inflation target and has invoked insidious inflationary pressures to warrant a pause in rising rates for inflation. the moment.
On Friday afternoon, the federal funds futures were predicting a 97.5% probability of Fed rate hikes at the May 1 meeting, with only 2.5% chance the Fed will lower rates. .
Jim O'Sullivan of High Frequency Economics wrote on Friday that "the rise in underlying inflation was going in the wrong direction from the Fed's point of view," adding that the Fed should remain "firmly on hold" because of GDP.
Michael Feroli, of JPMorgan, said the reading of the GDP should lead the Fed to abandon the description of its economy that "it has slowed relative to its solid rate," said Feroli, adding that inflation would be the main factor behind the "shy" growth in consumer spending.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Challenges in the longer term"data-reactid =" 22 ">Challenges in the longer term
In addition to concerns about consumption, the GDP report also confirmed the persistence of a slowdown in growth of investment in the fixed business activities, which is one of the main drivers of economic growth.
FEATURE – On this March 20, 2019, Jerome Powell, Chairman of the Federal Reserve, listens to the question of a reporter at a press conference in Washington. (AP Photo / Susan Walsh, File)
For the first quarter of 2019, business fixed investment rose only 2.7% qoq. In the previous quarter of 2018, investments had increased by 5.4% and in the first quarter of 2018, investments had increased by 11.5%.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Although the data is not likely to change the En Regarding household spending and fixed investment by companies, the Fed may be confronted with questions about its estimates of production At its March meeting, policymakers forecast economic growth of 2.1% in 2019 Economists have predicted that the United States would be & nbsp;not being able to reach a growth of 3%& nbsp; in the context of slowing global growth and the decreasing effect of Trump tax cuts. "data-reactid =" 36 "> Although the data is not likely to change the Fed's position on household spending and fixed investment, the Fed may be faced with questions about: At its March meeting, policymakers forecast economic growth of 2.1% in 2019. Economists predicted that the United States would not be able to achieve 3% growth because of the slowdown in growth. global growth and the decreasing effect of Trump tax cuts.
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In a heated note on Friday, Chris from MUFG Union Bank Rupkey wrote that Fed officials "had their heads in the eye" to forecast such low growth, noting that the Fed "downplayed how fast growth can be" against 3.2% growth. he said he disagreed with Fed officials who had warned him.risk of falling down& nbsp; justifying their GDP growth forecasts of nearly 2%. "data-reactid =" 37 "> In a heated note on Friday, MUFG Union Bank's Chris Rupkey wrote that Fed officials had" the mud of the eyes "to predict such weak growth, noting that the Fed" understates " how fast growth can be "facing growth of 3.2%." He disagreed with Fed officials, who had warned that the risks of a decline in almost 2% of GDP would be justified.
"Fed officials, please, stop scare the public with your statements warning about" downside risks, "Rupkey wrote. "There is no downside economic risk in today's GDP report, and this good news will be heard by markets around the world."
Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Friday that if the second quarter reads just as hot, "the Fed will spend a difficult summer."
If the government's spending, inventories and net exports can not support the next GDP report, it is possible that the GDP figures will decrease to bring the growth in production closer to the Fed's forecasts.
The Fed will not release updated economic forecasts at the May 1 meeting, but Fed Chairman Jerome Powell will be confronted with questions from reporters at the press conference.
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