Economic news is a great way to keep informed on how the economy is doing. You can read articles online about things such as the Federal Reserve, Unemployment, and Interest rates.
Inflation slowing more than many economists expected
Consumer price inflation is slowing down more than many economists expect. This is good news for investors and consumers. The CPI rose a modest 7.1% year-over-year in November, a notch below the record 7.7% increase in October.
Earlier this year, prices soared for many items, including energy. Fuel prices spiked early this year because of a war in Ukraine. But fuel import costs have fallen in recent months, and transportation issues have eased, likely helping to curb costs.
Inflation has also slowed for goods prices. Food prices have moderated since they skyrocketed earlier this year, though they still remain high. A number of services, such as medical care, dental care, and entertainment, have increased as well.
Despite the easing, inflation remains a concern. Households are coping with higher interest rates, which make borrowing more costly. Many are also tightening their budgets.
Consumer spending is a key factor in determining economic growth. A weak economy can cause a slowdown in consumer spending. On the other hand, a robust economy can drive consumer spending.
Consumer spending accounts for 70 percent of the overall economy in the U.S., and it is important to businesses. However, the economy is still grappling with a prolonged bout of high inflation.
Inflation has soared to its highest level in over three decades. This pressure is driving household budgets tighter. The US central bank is attempting to rein in the inflationary pressures.
Consumer spending has been held up by strong wage growth. Despite recent gains, total consumer spending intentions have slowed.
Inflation-sensitive industries such as autos, furniture, and recreational goods have been sapping consumer spending power. However, the labor market has continued to remain resilient. And wage growth has accelerated in the healthcare and education sectors.
The unemployment rate is one of the most important economic indicators. It is calculated by dividing the number of unemployed workers by the total number of people in the labor force. But the number of unemployed is not necessarily the same as the number of jobs available.
Moreover, there is no single number that can capture all the nuances of the labor market. Despite the many factors affecting the job market, a low jobless rate is a good indicator of a strong economy.
There are two main types of unemployment: involuntary and voluntary. Involuntary unemployment is when a worker is fired or laid off. Typically, employers will go to great lengths to hire and retain workers. However, this may not always be the case.
On the other hand, voluntary unemployment is when a person leaves a job willingly. This is usually because they are leaving the company to join another company, relocate, or look for another job.
The Federal Reserve has raised interest rates in recent months, pushing borrowing costs to a 15-year high. Its actions have been designed to slow down the economy and reduce the risk of inflation. However, investors aren’t sure how much higher interest rates will rise.
The Fed’s interest rate is called the federal funds rate. It is the rate at which banks set interest on loans, credit cards and savings accounts.
It also represents the amount of interest charged on deposits. Banks set these rates by measuring the supply and demand of money in the economy. They are also influenced by the prevailing inflation.
Earlier this year, the Fed raised the federal funds rate by 75 basis points in four meetings. This was its fourth hike in a row.
The Federal Reserve
The Federal Reserve economic news is that it is implementing a new monetary policy to try to slow the economy by hiking interest rates. This is a change from its previous policy, which included extremely low rates and significant bond market intervention.
As part of its new monetary policy, the Fed is reducing its balance sheet by purchasing $40 billion in mortgage-backed securities and $80 billion in U.S. Treasury securities per month.
A major goal of the central bank is to keep inflation at a manageable level. Inflation is driven by broader price pressures, including higher energy and food prices.
The Federal Reserve is also trying to find a balance between price stability and economic growth. Some economists believe that aggressive policies could encourage asset bubbles.
The Fed has refocused its monetary policy on slowing inflation. It also plans to continue reducing its balance sheet by cutting back on agency mortgage-backed securities.