Latest news with #EconomicLetter
Reuters
14-04-2025
- Business
- Reuters
Drop in job-finding rate, rise in time out of work could signal recession ahead, SF Fed paper says
April 14 (Reuters) - Behind the gradual and relatively small rise in the U.S. unemployment rate in recent years are a couple of less-closely followed labor market indicators that are flashing yellow for recession risk, according to research published on Monday by the Federal Reserve Bank of San Francisco. The analysis suggests a measure of hidden weakness in what has widely been seen as a solid labor market that is now coming under pressure from the Trump administration's massive tariffs, which have raised the twin risks of higher inflation and higher unemployment. In the lead-up to many past recessions, it has been typical for people who are out of work to take longer and longer to find a job, and to spend an increasing amount of time among the ranks of the unemployed, the authors of the regional Fed bank's latest Economic Letter found. "In the past, such patterns frequently occurred during the onset of recessions, suggesting that these developments could be signs of rising recession risk," the Letter's four co-authors wrote. The rise in the unemployment rate over the last couple of years has been slow, to 4.2% last month from a low of 3.5% in the second quarter of 2023. Many Fed policymakers have noted the relatively still-low unemployment rate as an indication of labor market strength. But a measure of the share of the unemployed finding jobs each month has been declining since mid-2023, a trend that mirrors that which preceded many previous recessions, the authors of Monday's Letter show. At the same time, since mid-2022, the median length of time spent unemployed has risen from about 8 weeks to more than 10 weeks. That compares to the peak of 10 weeks during the 2007-2009 financial crisis. "Although the size of the recent increase in unemployment remains relatively small compared with past onsets, the recent data trends warrant close monitoring for potential signs of rising recession risk," the Letter's authors wrote.
Yahoo
14-04-2025
- Business
- Yahoo
Drop in job-finding rate, rise in time out of work could signal recession ahead, SF Fed paper says
(Reuters) - Behind the gradual and relatively small rise in the U.S. unemployment rate in recent years are a couple of less-closely followed labor market indicators that are flashing yellow for recession risk, according to research published on Monday by the Federal Reserve Bank of San Francisco. The analysis suggests a measure of hidden weakness in what has widely been seen as a solid labor market that is now coming under pressure from the Trump administration's massive tariffs, which have raised the twin risks of higher inflation and higher unemployment. In the lead-up to many past recessions, it has been typical for people who are out of work to take longer and longer to find a job, and to spend an increasing amount of time among the ranks of the unemployed, the authors of the regional Fed bank's latest Economic Letter found. "In the past, such patterns frequently occurred during the onset of recessions, suggesting that these developments could be signs of rising recession risk," the Letter's four co-authors wrote. The rise in the unemployment rate over the last couple of years has been slow, to 4.2% last month from a low of 3.5% in the second quarter of 2023. Many Fed policymakers have noted the relatively still-low unemployment rate as an indication of labor market strength. But a measure of the share of the unemployed finding jobs each month has been declining since mid-2023, a trend that mirrors that which preceded many previous recessions, the authors of Monday's Letter show. At the same time, since mid-2022, the median length of time spent unemployed has risen from about 8 weeks to more than 10 weeks. That compares to the peak of 10 weeks during the 2007-2009 financial crisis. "Although the size of the recent increase in unemployment remains relatively small compared with past onsets, the recent data trends warrant close monitoring for potential signs of rising recession risk," the Letter's authors wrote. Sign in to access your portfolio
Yahoo
24-02-2025
- Business
- Yahoo
Fed expected to respond strongly to inflation, job market conditions, research shows
SAN FRANCISCO (Reuters) - Investors and economists expect the U.S. central bank to respond "strongly and systematically" to changes in inflation and the labor market, according to research published on Monday by the San Francisco Fed that underscores the current sensitivity of financial markets to U.S. economic data. The Fed's perceived responsiveness to economic data picked up notably in 2022, driven first by inflation data and, last year, by labor market data, based on the analysis of perceptions embedded in professional forecasts and in bond market moves published in the regional Fed bank's latest Economic Letter. The findings are in line with the Fed's actual response to inflation, which rose in 2021 but did not trigger any interest rate hikes until 2022. They also track with the Fed's reaction to labor market data, which weakened notably in the middle of last year and helped drive the Fed's decision to cut the policy rate by a full percentage point starting last September. See for yourself — The Yodel is the go-to source for daily news, entertainment and feel-good stories. By signing up, you agree to our Terms and Privacy Policy. The Fed's target policy rate is currently in the 4.25%-4.50% range. Recent weaker economic readings, including a survey released on Friday showing business activity fell to a 17-month low this month, have helped firm up market bets on two quarter-percentage-point reductions to the policy rate this year. Worries about stalling economic growth appear to be outweighing fears of a resurgence in inflation, also evident in recent surveys, at least as far as market bets on how the Fed will react with monetary policy. Interest rate futures contracts are currently priced for the first Fed rate cut this year to come in June, with the second to happen as early as October.
Yahoo
24-02-2025
- Business
- Yahoo
Fed expected to respond strongly to inflation, job market conditions, research shows
SAN FRANCISCO (Reuters) - Investors and economists expect the U.S. central bank to respond "strongly and systematically" to changes in inflation and the labor market, according to research published on Monday by the San Francisco Fed that underscores the current sensitivity of financial markets to U.S. economic data. The Fed's perceived responsiveness to economic data picked up notably in 2022, driven first by inflation data and, last year, by labor market data, based on the analysis of perceptions embedded in professional forecasts and in bond market moves published in the regional Fed bank's latest Economic Letter. The findings are in line with the Fed's actual response to inflation, which rose in 2021 but did not trigger any interest rate hikes until 2022. They also track with the Fed's reaction to labor market data, which weakened notably in the middle of last year and helped drive the Fed's decision to cut the policy rate by a full percentage point starting last September. The Fed's target policy rate is currently in the 4.25%-4.50% range. Recent weaker economic readings, including a survey released on Friday showing business activity fell to a 17-month low this month, have helped firm up market bets on two quarter-percentage-point reductions to the policy rate this year. Worries about stalling economic growth appear to be outweighing fears of a resurgence in inflation, also evident in recent surveys, at least as far as market bets on how the Fed will react with monetary policy. Interest rate futures contracts are currently priced for the first Fed rate cut this year to come in June, with the second to happen as early as October.
