Markets in a Minute - Take Hits, Move Forward
By: Zac Martin
Author: Zac Martin, Investment Associate
Week Ending March 21st – Take Hits, Move Forward
The FOMC Meeting on Wednesday decided to hold the Federal Funds Rate at the previous rate. This decision was not a surprise for investors and the expectation for a rate cut in June remains intact. Additionally, the committee released their Summary of Economic Projections for change in real GDP, the Unemployment rate, PCE Inflation, and the Fed’s Dot Plot. The committee is projecting, relative to the last several reports. lower GDP growth, higher unemployment, and higher inflation. Despite this, the Fed is still signaling that two more rate cuts are possible. See comparisons below.
Retail Sales increased but were slightly below analyst expectations. Overall retail sales increased 3.4% year over year, being led by health & personal care and home furniture. Food and beverage stores also remained at an elevated growth level. Additionally, Retail Sales has been growing at a decelerated rate, which may indicate weaker consumer spending. See the chart below.
Philadelphia Fed’s manufacturing business outlook survey reported a decline in both current and future business activity indexes. This decline is a continuation from the previous month’s report as firms report higher prices and lower production.
The Leading Economic Indicators Index contracted in the February report, however, the year over year metric remains less negative than previous reports. The continued decrease is still led by a suppressed ISM New Orders Index, which has decreased by 0.7% over the past six months. LEI & CEI chart below.
The Week Ahead:
- New Home Sales & Building Permits (3/25)
- Consumer Confidence (3/25)
- Q4 2024 GDP – Final Reading (3/27)
- Personal Consumption Expenditures for February (3/28)
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