Analysis Of The Fomc On Economic Conditions And Monetary Policy

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Report to the FOMC on Economic Conditions and Monetary Policy April 2015 4/30/2015 B7251 - Group 3 Samar Al Sayyed Nicholas Blake-Knox Nisrin Hala Damian Rozo Munoz Raluca Tintoiu Jassen Trenkow (Chair) Mimi Vavilala Table of Contents Part 1: Summary of Current Economic and Financial Conditions 3 Labor Market 4 Inflation/CPI 7 Output/GDP 8 Housing Market 9 Consumer Confidence and Retail Sales 10 Consumer Credit 11 ISM 12 PPI 13 Durable Goods Orders 13 Industrial Production 14 Trade Balance 15 Equity Markets and Mutual Fund Flows 16 Economic Forecasts 17 a. GDP growth 17 b. Unemployment rate 18 c. Inflation rate 18 Part 2: Monetary Policy Alternatives 19 Part 1: Summary of Current Economic and Financial Conditions…show more content…
In these sectors, the economy added an average of 54k, 44k, 27k, and 26k jobs per month over the last 12 months, respectively. Retail added ~350,000 jobs over the last 12 months, with most retail industries contributing to the increase, a key indicator of economic activity improvement. On the other hand, mining, construction, and manufacturing have recently seen a sharp decline; in Q1 2015, the mining sector 73% of the jobs it created in all of 2014, and construction saw the sharpest retreat. Figure 5: Net Changes in Fastest Growing And Declining Sectors Average hourly earnings continued to improve, however, average weekly hours saw a small drop of 10 basis points. Figure 6: Average Hourly Earnings and Average Weekly Hours Inflation/CPI The Consumer Price Index (CPI) has dropped notably over the last 6 months, albeit we saw a marginal increase in March, primarily driven falling food energy prices. The strong decline resulted in inflation for all components of the CPI turning negative for the first time since 2009, increasing the risk of a deflationary period, and creating additional challenges for potential tightening of monetary policy. Core CPI remains flat at 1.75%, below the Fed’s preferred level. Crude oil volatility has contributed to the drop in CPI, with WTI losing >50% in 2014, before a marginal gain in recent weeks.

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