Chief economics correspondent, The Wall Street Journal • Author, "Trillion Dollar Triage," on sale now
The November jobs report keeps the Federal Reserve on track to raise interest rates by 50 basis points at its meeting in two weeks and underscores the risk that officials will raise rates above 5% in the first half of next year.
One chart that might be particularly unnerving to policy makers is what average hourly wage growth looked like as of the October report (3.9% on a 3-month annualized basis) versus now (5.8%)
Economists who have been anticipating lower inflation are now more confident in those forecasts because new apartment lease rents are decelerating This will eventually feed through to U.S. inflation gauges, but not immediately
Fed officials don't sound particularly troubled. Governor Christopher Waller last month noted prices were up 40-45% in two years, so even if prices fall 15%, many homeowners are fine. “If you bought at the peak and you put very little money down—yeah, you’re in some trouble."
Consumers have a big cushion of savings. Corporations have lowered their debt-service costs. For the Fed, a more resilient private sector means that when it comes to rate rises, the peak or “terminal” policy rate may be higher than expected.
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Fed hikes by 75 basis points. New sentence in the FOMC statement signals more increases but hints at possibly smaller increments