Weekly Economic & Financial Commentary

Summary

United States: Jobs Day Fireworks to Start 2023

• During January, payrolls jumped by 517K, the unemployment rate fell to 3.4% and average hourly earnings rose by 0.3%. The FOMC raised the fed funds target range by 25 bps to 4.5%-4.75% this week. The ISM services index rebounded to 55.2 in January, while the ISM manufacturing index fell to 47.4. The Employment Cost Index (ECI) rose 1.0% in Q4. In December, job openings (JOLTS) jumped to 11.0 million, while construction outlays fell 0.4%.

• Next week: Trade Balance (Tue), Consumer Credit (Tue)

International: Europe's Central Banks Continue Along Rate Hike Paths

• The European Central Bank (ECB) delivered a 50 bps increase in its Deposit Rate at this week's monetary policy announcement, and offered a relatively determined message to continue along its monetary tightening path. The ECB pre-committed to another 50 bps increase in March, a somewhat unusual move, and said it would keep interest rates at restrictive levels for some time. The Bank of England (BoE) also raised its policy rate 50 bps at its meeting and delivered relatively balanced commentary. We expect a final 25 bps rate increase at the BoE's March meeting, bringing the policy rate to a peak of 4.25%.

• Next week: RBA Rate Decision (Tue), Riksbank Rate Decision (Thu), U.K. GDP (Fri)

Interest Rate Watch: FOMC's Job Not Yet Done

• The FOMC elected to raise the federal funds rate by 25 bps to a range of 4.50%-4.75% at the conclusion of its monetary policy meeting on Wednesday. The clear message was that the job is not yet done in getting inflation back down to 2% and further tightening lies ahead, but just how much remains uncertain.

Topic of the Week: Gaining Economic & Financial Ground in the Black Community Since COVID

• Wednesday marked the first day of Black History Month 2023. To coincide with this celebration, we produced a report that analyzes the economic and financial shifts experienced by the Black and African American Community relative to pre-pandemic times. Has the Black and African American community gained or lost economic and financial ground over the past three years?

View the full report