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Thursday, December 15, 2022

Today’s newspaper Miles WoodlandSenior Markets Editor at Yahoo Finance. Follow him on Twitter. @MylesUdland And on LinkedIn. Read this and more market news on the go Yahoo Finance app.Yahoo Finance app.

The Federal Reserve expects a recession next year.

But don’t call it just recession.

Fed officials said in their latest economic forecast summary released Wednesday that they expect gross domestic product growth to stall at just 0.5% by the end of next year, while the unemployment rate is set to rise to 4.6% from the current 3.7%.

These forecasts were released in conjunction with the Fed’s final monetary policy decision in 2022, in which the central bank raised benchmark interest rates by 0.5 percent as expected.

Asked during a press conference after the announcement whether these forecasts — flat growth, rising unemployment — signaled a hit to the economy next year, Powell apologized.

“I don’t think it qualifies as a failure … because you have positive growth,” Powell said.

Federal Reserve Board Chairman Jerome Powell speaks at a news conference announcing that the Federal Reserve has raised interest rates by half a percentage point at the U.S. Federal Reserve Building in Washington, December 14, 2022. REUTERS/Evelyn Hockstein

Although NBC’s Brian Cheung said in an interview with Powell, the Fed’s unemployment projections suggest that 1.6 million Americans will lose their jobs next year.

“There will be some softening in labor market conditions,” Powell said. “And I wish there was a completely painless way to restore price stability. There isn’t. And that’s what we can do.”

Indeed, Wall Street is one step ahead of Powell.

“The increase in the unemployment rate between this year and next would never have happened without the economy going into recession,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note on Wednesday.

As we’ve seen in many predictions for the market and the economy next year, the consensus among most strategists remains strong around the idea that the stock market will hit the economy in the second or third quarter of 2023. And most strategists, who are expected to reverse the Fed’s decline by easing policy, are betting that stocks will rebound by the end of ’23.

But Tuesday’s inflation data showed that the Fed’s strong pace this year – a total of 4.25% in total – has begun to have some effect on inflation, economists are increasingly skeptical that the Fed is not misrepresenting the effectiveness of its own program. It aims to control inflation and return it to its 2% target.

“Despite strong evidence that core inflation will slow significantly next year, the Fed has doubled down today,” said Paul Ashworth, chief North American economist at Capital Economics.

Ashworth added: “It’s hard to know whether Fed officials really believe their own economic and price forecasts or whether they’re making a point to reverse some of the financial conditions in the past month, following the Fed’s November policy decision in Treasury yields and the rally in stocks.”

Still, whether Fed officials want to call next year’s economic outlook a recession or not, their own predictions are how the central bank will respond to that scenario. Interest rates are expected to rise to 5% in 2023 before easing to 4.1% in 2024.

“The Fed is willing to risk a downturn in the labor market to bring down inflation, and if anything, the December projections suggest that risk has increased, not decreased,” said Michael Gapen and Bank of America’s Global Research Economics Group. .

“We agree and continue to expect a recession in 1H 2023 and an increase in the unemployment rate above the median FOMC member projects,” he said.

Rising unemployment, sluggish growth, and a 100 basis point interest rate cut.

If he walks like a retard and talks like a retard, call him what you will.

What to see today

Economy

  • 8:30 a.m. ET: Making an empireDecember (-0.9 expected, 4.5 last month)

  • 8:30 a.m. ET: Retail sales growthMonth-on-month, November (-0.2% expected, 1.3% in the previous month)

  • 8:30 a.m. ET: Retail sales excluding carsMonth-on-month, November (0.2% expected, 1.3% in the previous month)

  • 8:30 a.m. ET: Retail sales excluding cars and gasMonth-on-month, November (0.1% expected, 0.9% in the previous month)

  • 8:30 a.m. ET: Retail Sales Control Group, November (0.1% expected, last month 0.7%); )

  • 8:30 a.m. ET: Initial unemployment claimsWeek ending December 10 (232,000 expected, 220,000 last week)

  • 8:30 a.m. ET: Continued claimsWeek ending December 3 (1.668 million expected, 1.671 last week)

  • 8:30 a.m. ET: Philadelphia Fed Business Outlook DirectoryDecember (-10.0 expected, -19.4 last month)

  • 9:15 a.m. ET: Industrial productionMonth-on-month, November (0.1% expected, 0.1% in the previous month)

  • 9:15 a.m. ET: Capacity utilizationNovember (79.8% expected, 79.9% last month)

  • 9:15 a.m. ET: Production (SIC) productionNovember (-0.1% expected, 0.1% last month)

  • 10:00 p.m. Business inventoriesOctober (0.4% expected, 0.4% last month)

  • 10:00 p.m. Net long-term TIC flowsOctober ($118.0 billion in the previous month).

  • 10:00 p.m. Total net TIC flowsOctober ($30.9 billion in previous month)

Revenues

  • Adobe (ADBE), Jabil (JBL), Live Venture (straight ahead), Trinity Biotech (Tribe), ImmunoPrecise Antibodies (IPA)

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