US in Low Growth Mode for the Next Few Years

US in Low Growth Mode for the Next Few Years

US in Low Growth Mode for the Next Few Years


US consumers’ expectations for longer-term inflation rebounded last month to the highest level since August, according to results of a Federal Reserve Bank of New York survey released Monday.

Expected inflation 3 years ahead was 2.9%, according to the median respondent of the New York Fed’s monthly consumer survey. The measure, one of a few that Fed policy makers watch closely as an indicator of where actual inflation may be headed, fell in January to the lowest on record in data going back to June 2013.

US Fed policy makers see stable inflation expectations and continued job gains as Key to raising inflation, which has been below the central bank’s 2% target for more than 4 years.

Expected wage growth over the next 12 months rose to 2.5% in June, marking the highest in a year, from 2.2%, according to the median response to the New York Fed survey. But, just 16.6% of respondents said they expected to be in better financial shape in a year, the fewest since October 2014.

Meanwhile the Fed continues its wait to see stance on interest rates

Federal Reserve Bank of St. Louis President James Bullard said he thought the UK’s vote to leave the EU would nnot have a lasting effect on the US economy and he did not view a drop in US bond yields as a warning on the outlook for growth.

“Now that the markets have had some chance to digest the move, I think the ultimate impact on the US economy will be close to Zero,” Mr. Bullard told reporters Tuesday following a speech in St. Louis.

Mr. Bullard, a voting member this year on the policy-making FOMC, said the “shock” of the vote to exit explains why yields on US Treasuries had fallen to historic lows.

“Wall Street has taken that as a signal that growth is slowing” in the US, he said. “I think it’s a flight to safety. I would not take it as a signal of US growth prospects.”

In his speech, Mr. Bullard repeated the argument he presented on 17 June that the US is stuck in a low growth environment for the next 2 to 3 years and that Fed officials should keep the federal funds rate almost Unchanged for that frame.

Tuesday, US major stock market indexes finished at: DJIA (record high) +120.74 at 18347.67, NAS Comp +34.18 at 5022.82, S&P 500 (record high)+14.98 at 2152.14

Volume: Trade was above recent averages with about 981-M/shares exchanged on the NYSE

  • Russell 2000 +6.2% YTD
  • DJIA +5.3 % YTD
  • S&P 500 +5.3% YTD
  • NAS Comp +0.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.19) Very Bullish (0.50) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.25) Bullish (0.25) Bullish (0.35) Neutral (0.14)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.34) Neutral (0.23) Bullish (0.48) Bullish (0.31)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.27) Neutral (-0.10) Bearish (-0.33) Bearish (-0.38

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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