U.S. Outlook: Time for tighter monetary policy?
The data will create a quandary at the FOMC meeting, where voting members will need to weigh a tightening labor market and above trend-GDP growth against consumer inflation that continues to run below target.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Oct. 27.Key observations:
- The hurricanes’ fingerprints on the GDP report were relatively light, despite the plunge in September payrolls – consumer and business spending continued to move higher.
- By the December FOMC meeting, the economic and financial environment will be more than ripe for another quarter point rate increase from the Fed.
- We are forecasting a strong rebound in job growth to around 260K from a drop of 33K in September, with the unemployment rate holding steady at a 17-year low of 4.2%.
- We believe around 80K jobs created in October will be a rebound effect from jobs that were counted as lost during the hurricanes.