It’s a crucial week for economists and investors as key economic data will be released, along with two days of testimony from Fed Chair Jerome Powell before Congress.
Powell testifies before Congress
Wednesday, Thursday at 10am est
Fed officials have been singing the same songbook in recent weeks, emphasizing patience regarding potential interest rate cuts. Fed governor Christopher Waller summed it up best when he recently asked “what’s the hurry?”
Powell may not have appreciated that question. He will spend two days this week with lawmakers on Capitol Hill, many of whom are more than likely to have a ready answer to Waller’s question.
Remember, Senate Democrats already wanted the first rate cut in January, saying the Fed’s tight monetary policy was hurting the housing market. Talking about patience may not be welcome.
Democrats are eager for the Fed to cut rates and potentially shake up the economy ahead of the November elections. Republicans will likely stress the need for the Fed to stay the course to combat still-high inflation. It is a political year, and the Fed’s actions will be seen in this light, no matter how often it vows to be apolitical.
February work report
Friday at 8.30am Easter
Economists expect the job market to cool after two “fiery” job gains in the past two months, said Douglas Porter, chief economist at BMO Capital Markets. In December and January, the economy added an average of 268,000 net new jobs per month.
Economists polled by the Wall Street Journal expect the economy to add 210,000 jobs in February. The unemployment rate is expected to remain stable at 3.7%, the lowest level in 50 years. Average hourly wages are expected to moderate to a 0.2% increase from the previous month’s strong 0.6% increase.
“Although we believe job growth will cool in February, we still see a number of signs that the labor market remains strong, JPMorgan’s Feroli said.
First quarter GDP tracking estimate
The data won’t be officially released until the end of April
Economists are raising their forecasts for first-quarter gross domestic product based on recent data.
Michael Feroli, chief U.S. economist at JP Morgan Chase, said he raised his estimate to 2.25% in the January-March quarter, from his previous forecast of 1.7%.
Aichi Amemiya, senior U.S. economist at Nomura Securities, said he raised his tracking estimate from 2.1% to 2.2%.
The Atlanta Fed’s GDPNow estimate is 2.1%, down from 3% previously.
The government revised its estimate for fourth-quarter growth to 3.2% from 3.3% previously. Official first-quarter GDP data will not be released until April 25.
So the economy “is still in the soft landing zone,” said Scott Anderson, BMO’s chief U.S. economist.