Are We There Yet? When my kids were young, they would always ask: “How much longer?” My standard answer was: “5 more minutes.” After many of these exchanges, I would respond with: “6 more minutes” and then “7 more minutes.” T hey finally figured out that I really had no idea how much longer. This week we try to answer the economic question: “Are we there yet?” From an investing perspective, I think we are currently in a “Goldilocks” moment for three reasons: (1) inflation has seemingly been tamed to provide price stability, (2) unemployment rates are near all-time lows, and (3) the economy continues to expand. We are long term investors who employ a strategic asset allocation that assures our clients are always "in" the market. We do not believe that a market timing approach works well for anyone who cannot accurately forecast the future (translation: all mere mortals). We will discuss this in detail in our blog next week. Last week we introduced a cash position to our eff...

The FOMC Skips September Rate Hike... As some anticipated, the Federal Open Market Committee (FOMC) held interest rates steady at its September policy meeting. The FOMC had raised its benchmark federal funds rate at their July 2023 meeting to a range between 5.25% and 5.5%, a 22-year high. FOMC Chair Powell suggested that they were prepared to raise rates one more time this year, at either of their two remaining meetings, to combat inflation.[1] ...But May Not Be Done Yet While inflation is well down from its 9.1% peak last year, it is still higher than the FOMC target. Their projection for annual core inflation, which excludes volatile food and energy prices, is 3.7% for the fourth quarter - above their 2% target.[1] Source : https://fred.stlouisfed.org/series/FEDFUNDS Since rates may be raised again, many economists have described the latest FOMC decision to hold rates steady as a “skip” instead of a “pause.” Higher for Longer! The FOMC has been lifting rates since March 2022 to ...

The FOMC: Too Little Too Late? The Federal Open Market Committee (FOMC) completes the first scheduled meeting of 2022 today. The FOMC gathers for two day meetings eight times each calendar year. They are the governing committee for monetary policy in the United States. Their primary objectives are to promote price stability and full employment. By price stability, we are talking about controlling inflationary pressures. Inflation has many definitions, but the one most commonly used is the consumer price index (CPI). Full employment can be achieved by best utilizing all available participants in the domestic labor pool. The balance between full employment and price stability has historically been described by the Phillips Curve. As the pool for available workers gets drained, it takes higher wages to attract (and retain) the best talent. This purchasing power then translates into increased demand for products and services - resulting in an increase in CPI. This feedback loop ca...