Federal Reserve Bank of Chicago President and CEO Austan Goolsbee said the U.S. is currently on what he calls a “golden path.” Inflation has cooled from historic highs without the country going into a recession, and the unemployment rate is at what economists generally consider a sweet spot. Now the key is staying there.
Federal Reserve
The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing. Coming just weeks before the presidential election, the Fed’s move also has the potential to scramble the economic landscape just as Americans prepare to vote.
American consumers and home buyers, business people and political leaders have been waiting for months for what the Federal Reserve is poised to announce this week: That it’s cutting its key interest rate from a two-decade peak.
Wednesday’s report from the Labor Department showed that consumer prices rose 2.5% in August from a year earlier, down from 2.9% in July. It was the fifth straight annual drop and the smallest since February 2021. From July to August, prices rose just 0.2%.
Though consumer sentiment is slowly rising, a majority of Americans in some surveys still complain about elevated prices, given that the costs of such necessities as food, gas and housing remain far above where they were before the pandemic erupted in 2020.
The S&P 500 climbed 1% to break a brutal three-day losing streak. It had tumbled a bit more than 6% on a raft of concerns, including worries the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.
America’s economy is about to stick what’s called a “soft landing,” which is when inflation returns to the Fed’s target without a recession — a feat that’s only happened once, during the 1990s, according to some economists.
In 2020, the United States Mint created a commemorative coin collection to honor the Negro National League on the centennial anniversary of its founding. An exhibit of those coins opened at the Federal Reserve Bank of Chicago’s Money Museum this month.
Older Americans are fueling a sustained boost to the U.S. economy. Benefiting from outsize gains in the stock and housing markets over the past several years, they are accounting for a larger share of consumer spending — the principal driver of economic growth — than ever before.
Friday’s report from the Labor Department also showed that the unemployment rate dipped from 3.9% to 3.8%. The jobless rate has now remained below 4% for 26 straight months, the longest such streak since the 1960s.
The economy looks set to grow 2.2% this year after adjusting for inflation, according to the National Association for Business Economics. That’s up from the 1.3% predicted in the association’s prior survey, which was conducted in November.
Friday’s government report showed that December’s job gain exceeded the 173,000 that were added in November. The unemployment rate was unchanged at 3.7% — the 23rd straight month that joblessness has come in below 4%.
Friday’s report from the Commerce Department showed that U.S. consumer prices slid 0.1% last month from October and rose 2.6% from November 2022. The month-over-month drop was the largest since April 2020 when the economy was reeling from the COVID-19 pandemic.
Tuesday’s report from the Labor Department showed that prices either fell or rose more slowly across a broad range of goods and services, including gas, new and used cars, hotel rooms and housing.
This weekend, visitors can learn all about the Federal Reserve and get a rare glimpse at an historic and heavily fortified building more than 100 years old.
The average rate on the benchmark 30-year home loan rose to 7.31%, from 7.19% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.70%.
