Weekly Market Update: February 21, 2017
What We Learned Last Week
The state of the labor market is largely finalized through January 2017 (February 11, 2017 for layoff trends). Gross Domestic Product (GDP) estimates for last year are still in flux, waiting on more data to fill in the pieces. Last week’s report on service consumption implied that the 4Q GDP estimate will be bumped up closer to 2.5 percent annualized. A final picture of the economy’s performance in 2016 won’t be firmly in hand for a few more years. So, while hiring lags business conditions, it takes time to know the true state of business conditions. That’s why indicators such as weekly applications for unemployment insurance benefits are so valuable.
Fed Chair Yellen’s congressional testimony on the state of the economy encouraged market participants to keep an open mind about the possibility of a rate increase at the upcoming March Federal Open Market Committee (FOMC) meeting. She reiterated that the FOMC “… expects the evolution of the economy to warrant further gradual increases in the federal funds rate to achieve and maintain its employment and inflation objectives,” and added that “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession."
What We Expect to See in the Week Ahead
This week’s economic calendar focuses on the housing sector.
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