U.S. Outlook: Is tighter monetary policy already beginning to bite?

Posted By Scott Anderson In Economic Outlook | No Comments

The September FOMC minutes, released Wednesday, revealed an upbeat assessment of current U.S. economic conditions and the outlook.

Federal Reserve building (Washington DC) at dusk. [1]At the same time, the Fed dismissed the downside risks to the U.S. economy from Hurricane Florence, the China-U.S. trade war, and foreign economic developments as having only a small net effect on U.S. real GDP growth.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Oct. 19.

Key observations:
  • It will still be quite some time before we see the impacts that the Fed tightening to date has had on our economic and financial conditions.
  • The September FOMC minutes commented in several places about rising equity prices and loose financial conditions in the marketplace as a vulnerability and risk to financial stability.
  • Interest-rate-sensitive sectors of our economy from housing to auto sales are already slowing in part due to higher interest rates.
  • From my chair, the FOMC dot plot median feels like an economist’s fairy tale.

Read my full report. [2]

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URL to article: https://changematters.bankofthewest.com/2018/10/19/u-s-outlook-is-tighter-monetary-policy-already-beginning-to-bite/

URLs in this post:

[1] Image: http://blog.bankofthewest.com/wp-content/uploads/2018/02/fedreserve_dusk_crop.jpg

[2] Read my full report.: http://blog.bankofthewest.com/wp-content/uploads/2018/10/BankoftheWest_USOutlook_10_19_18.pdf

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