U.S. Outlook: Two steps forward, one step back
The chorus of calls from Fed officials that a rate hike is coming soon got a lot louder this week.
For more on these developments, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 3.Key observations:
- The consistent and urgent messaging by FOMC voting members points pretty strongly toward a March rate increase.
- The labor market has tightened faster than many doves thought likely just a few months ago.
- Initial jobless claims dropped to an ultra-low 223K last week, near a 44-year low!
- Given recent comments from Fed officials, I put the probability of a March rate hike at around 70% today.
(Editor’s note: An earlier version of the full report contained a misspelling of the name of John Williams, San Francisco Fed president. We regret the error.)