- Macro Monday
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- Macro Monday (1/29/2024)
Macro Monday (1/29/2024)
The Macro Institute's Weekly Economic Primer
The Macro Institute
January 29, 2024
We’re often accused of being too hard on the Fed and other Central Banks. Admittedly, setting the right course for monetary policy is not an easy job, but it’s even harder when you have as poor of a track record forecasting inflation as the Fed has recently. Throughout 2023, and as recently as its December meeting just a few weeks ago, the Fed had forecast core PCE inflation – which it targets to run at 2% – would come in between 3.2% and 3.9%. As the graph above shows, after each subsequent forecast inflation has fallen faster than the Fed projected. We learned last week that core inflation was at 2.9% for 2023 and ran at a 2% rate – right on target! – in both Q3 and Q4. Overestimating inflation isn’t a fatal error for a central bank if it’s willing to alter its policy trajectory in response. The Fed and its peers could be (should be!) cutting interest rates right now, but they seem content to wait for more data. Keeping rates higher for longer at these levels is hurting small banks, as we’re seeing in this season’s earnings reports, and holding back much-needed investment from businesses and residential construction.
The Macro Week In Review
The Macro Institute’s Recent Tweets
I am surprised at how many regional banks I have seen miss their Q4 earnings numbers in the last week. Granted these are mostly smaller regional banks, but I do wonder if there are longer-term consequences when the disappointment seems to be this broad?!
— Francois Trahan (@FrancoisTrahan)
1:35 PM • Jan 24, 2024
I don’t know much about #bitcoin, but I'm fascinated by the enthusiasm of its followers. Conventional thinking in finance is that bitcoin trades at the margins of liquidity, accentuates moves seen in other risk assets, and has mostly trended alongside equities in recent years.
— Francois Trahan (@FrancoisTrahan)
1:26 PM • Jan 23, 2024
We now have 4 regional PMIs available for the month of January with the broader economy PMIs set for release next week. Thus far, 3 of the 4 regional PMIs were down, and the one that is higher, (the Philly Fed Index) is only up a few points and still in negative territory.
— Francois Trahan (@FrancoisTrahan)
1:16 PM • Jan 26, 2024
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