US Economic Chartbooks
Please see our Economic Week Ahead Chartbook for a discussion of next week's economic releases provided in a visually friendly format that includes graphs, brief descriptions of SMR's forecasts, and links to detailed data previews. If you missed anything from last week, see our Economic Week in Review Chartbook for a look back at the releases with links to full analyses.
Research Briefing - December hike likely, still uncertainty on inflation
On Wednesday, November 22, the Federal Reserve released the minutes of the October 31-November 1 FOMC meeting. The minutes support a December rate hike, despite a high degree of uncertainty of whether the factors holding down inflation will be transitory or more permanent. This suggests a continued gradual pace of rate hikes next year.
Fed 'Rules Regarding Delegation of Authority'
The announcement that Chair Janet Yellen will step down as a Governor when her successor as Chair is sworn in -- presumably Jerome Powell -- sets up a real possibility that the Board of Governors will have four of seven seats empty in the near future. This situation would be unique in our experience. The Board has not had a full complement since July 2013, but it has never had more than three vacancies at a time. At junctures where this was a real threat, the President and the Senate acted quickly to ensure there were candidates nominated and confirmed before that came to pass. In the present circumstances, the Federal Reserve is preparing for the possibility.
Tax Reform Advances on Two Fronts
Two very different versions of tax reform advanced in the House and the Senate yesterday. Some differences - like a delay in cutting the corporate tax rate - aren't likely to derail tax legislation. Others, like repeal of state and local tax deductions, will be harder to resolve. This week's election results increase the urgency for Republicans to pass a package of tax cuts, and we still assign odds of about 60% to legislation being enacted.
Research Briefing - Fed Outlook 2018 - Voters rotate, Board is reshaped
Beyond a new Fed Chair, there is changing of the guard taking place among the voting members of the FOMC that likely tilts the committee moderately more hawkish. The turnover is happening at the Board of Governors and regional Fed Presidents. While this does not equate to a large change in the expected gradual pace of rate hikes, the rotation raises the possibility that the pace of hikes could be on the high end of what could be considered a gradual removal of policy accommodation.