US Economy Today: Unemployment Claims Edge Down

Consequences of COVID Should Give Fed Pause Before Rate Cuts, Fed’s Barkin Says

16 minutes ago

Richmond Federal Reserve President Tom Barkin joined the chorus of Fed speakers seeking “confidence” that inflation has moved to return to 2% before cutting rates, Thursday. However, he also raised concerns about the disruption that the pandemic and inflation had on the economy.

“While our wars on COVID-19 and inflation can’t compare to the horrors of actual war, I’m still wondering how these experiences may have changed our economy,” said Barkin.

The lasting consequences of these events are a reason the Fed should approach interest rate cuts with caution, he said.

Barkin has joined several Federal Reserve officials in making public comments about the Federal Open Market Committee’s path forward on interest rates after members voted last week to keep rates at highs not seen in more than two decades.

Their comments have generally echoed the sentiments of Chair Jerome Powell, who said a strong economy gives the Fed time to make sure that inflation rates continue to fall, making a rate cut at the March meeting unlikely. 

Like the other speakers, Barkin laid out several economic indicators he would watch, including whether wage growth stayed higher than normal, the levels of housing inventory and its impact on costs, and how deglobalization could create new supply-chain pressures that drive inflation higher. 

Freddie Mac Mortgage Rates Ticked Up This Week

2 hr 33 min ago

Freddie Mac mortgage rates are hovering in the mid-6% range and didn’t budge much in the week ending Feb. 8.

The average rate of a 30-year, fixed-rate mortgage was 6.64%. That’s up from 6.63% the week before. Mortgage rates have hovered in this range since late December.

Potential home buyers have been looking for a reprieve from a market in which few homes are for sale. Existing homeowners are hesitant to sell their home and give up their current low interest rate. An improved home-building environment could also help improve the outlook for beleaguered homebuyers.

Wholesale Trade Comes in Above Economists’ Predictions

4 hr 15 min ago

Wholesale trade grew 0.4% in December, wiping out the revised losses from November. Economists expected an increase of 0.3%.

Wholesale sales jumped 0.7% after it fell 0.1% in November. The inventory-to-sales ratio was 1.34, unchanged from the prior month.

Unemployment Claims Edge Down As Job Market Stays Healthy

6 hr 24 min ago

The number of new unemployment claims continued to hover last week, showing a labor market holding steady under the pressures of high interest rates.

The week ending Feb. 3, 218,000 people filed for unemployment, a decrease of 9,000 from the week before and similar to pre-pandemic levels.

The figure has been hovering around that level for months as the job market has stayed healthy despite the Federal Reserve’s campaign of anti-inflation interest rate hikes, which have made it harder for individuals and businesses to borrow money.