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Economic Commentary

Economic Commentary – February 10, 2025

February 10, 2025

The most notable number for this week is the number from Friday of last week— but NOT the nonfarm payrolls number, despite its importance. The Michigan Survey of Consumer Confidence caught almost everyone unaware, both the decline in the figure and, especially, the sharp spike in one-year inflation expectations. Although there has been much complaining about inflation over the last three years, consumers have been quite solid in signaling an expectation that inflation would not be higher than 3%-3.2%. The Michigan Survey indicates that numbers in that range are still the longer-term, five-year expectation. Yet the one-year number went from the last Survey reading of 3.3% to the current 4.3% in a preliminary reading for February. Despite the fact that the preliminary numbers have been known to be revised and that there have been a few errors in the calculations in recent years, the Federal Reserve is surely going to pay notice, with perhaps heightened attention to the many other measures of inflation expectations that they follow. With members of the Federal Reserve giving many speeches and appearing to circle the wagons around Chairman Powell’s message that the economy provides the Federal Reserve with lots of reasons to proceed deliberately (if not with caution, then at least with care) on further interest rate cuts . . . don’t expect a rate cut in March. The markets aren’t. 

Data to Watch:

  1. New York Federal Reserve Consumer Inflation Expectations for January, released Monday, February 10, 2025
  2. Federal Reserve Chairman Powell Testimony before Senate Banking Committee, Tuesday, February 11, 2025
  3. US Consumer Price Index (CPI) for January, released Wednesday, February 12, 2025

Suggested Reading:

  1. Why the Job Market Is Giving the Fed Cover to Extend a Pause on Rate Cuts
  2. Nature Index 2024 Research Leaders: standout performers make their mark in health sciences
  3. Seven Recent Developments in US Science Funding
  4. The Investor Betting on People In Their 50s and 60s—Because Older Is Better

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