Unemployment Falls, Inflation Slows, the End of Interest Rate Hikes
May 11, 2023 | FIRESIDE CHARTS
The economy isn’t growing as fast as it once was but it’s too early to call this a slowdown. Hard economic data is still very positive, and inflation continues to trend in the right direction. The Federal Reserve’s rake hike cycle may finally be over. Rising interest rates are beginning to take a toll on indebted companies. Excess savings are falling but that’s not necessarily a negative indicator. Is the pandemic induced increase in IT spending here to stay?
1. Unemployment is at generational lows and still falling, which is unambiguously good for the economy:
Source: The Daily Shot 5/8/2023
2. The continued fall in unemployment has taken place alongside a rise to multi-decade highs in the “prime age” labor force participation rate:
Source: The Daily Shot 5/8/2023
3. Fewer small businesses are planning to raise prices which is consistent with a continued moderation in inflation:
Source: Piper Sandler
4. Inflation “surprised” economists to the upside but more recently inflation releases have been more in-line with expectations:
Source: BofA Global Research
5. Outside of a severe recession, the end of the Fed hiking cycle has been positive for equities historically:
Source: Oxford Economics
6. Low interest rates allowed many companies to limp along longer than they should have but their time has finally run out:
Source: S&P Global Market Intelligence
7. Excess savings have generally risen in recent recessions. Consumers spending excess savings may be a sign of confidence not weakness:
8. The pandemic may have been a catalyst, but a strong IT backbone is crucial for any business to operate efficiently:
Source: Morgan Stanley Research
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