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GRADING THE FED’S QE PROGRAM: A MULTI-WEEK GROUP PROJECT

With six months of economic and market data since the end of QE, we assess the latest round of the program that ended in October 2014. We focus on QE’s impact on the banking and financial sector, by examining the amount of financial stress in the system, which overall has decreased since the beginning of QE in November 2008. We give the Fed a “pass” on QE as it relates to banking and financial system stress.

WATCHING WAGES

While wage growth has been tepid recently, 67 industries have seen wages increase at double the average (21% per annum), with good old American know-how roles well represented. The April employment report suggests wage growth likely remains a concern for Fed policymakers as they debate when to begin raising rates. Our view remains that the Fed may begin to hike rates in late 2015.

CONSUMER CONSISTENCY

Since the peak in oil prices in June 2014, consumers saved some, spent some on nonessential items, and paid down some debt, even as measures of consumer sentiment soared. The big drop in gasoline prices has not provided a big lift to the consumer sector, which continues to struggle in this recovery, nor did it change the overall tepid trajectory of consumer spending.

A WEAK WEEK?

First quarter economic weakness will likely get plenty of attention this week, when the initial estimate of Q1 2015 GDP is expected to confirm tepid growth during the quarter. We continue to expect that the FOMC will begin to raise rates in late 2015, when it is “reasonably confident” that inflation will move back to its 2% objective over the medium term. Economic performance since the end of the recession has varied widely by state, with oil playing a key role.

BEIGE BOOK: WINDOW ON MAIN STREET 4/20/15

The latest Beige Book suggests that the U.S. economy is still growing at a pace that is at or above its long-term trend, and that some upward pressure on wages is beginning to emerge. Optimism regarding the economic outlook far outweighed pessimism throughout the Beige Book as it has for the

 
Results: 41 Articles found.
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