EconUpdate by P. Duffy
Initial unemployment claims rebound 6.2 percent to 770,000
What does this mean? Although initial claims rebounded, that’s likely due to the signing of the new stimulus package, as claims for benefits in all programs fell 9.4 percent in the last week of February.
In the week ending March 13, initial unemployment claims were 770,000, an increase of 45,000 from the previous week’s revised level. Continued claims during the week ending March 6 were 4,124,000, a decrease of 18,000, or 0.4 percent, from the previous week’s revised level. The total number of continued weeks claimed for benefits in all programs for the week ending February 27 was 18,216,463, a decrease of 1,902,005, or 9.4 percent, from the previous week.
February Leading Economic Index rises another 0.2 percent to highest level in a year
What does this mean? Despite reported weakness for building permits and supply chain disruptions, these effects are likely transitory, as the overall trend is positive.
The Conference Board Leading Economic Index®(LEI)for the U.S. increased another 0.2 percent in February to 110.5, following a 0.5 percent increase in January and a 0.4 percent increase in December. The Conference Board now expects the pace of growth to improve even further this year, with the U.S. economy expanding by 5.5 percent in 2021.
Federal Reserve confirms commitment to keeping rates low as labor market recovers
What does this mean? Learning lessons from the aftermath of The Great Recession, this time the Fed is committed to focusing on rebuilding the labor market, even if that means temporarily higher inflation.
The Federal Reserve decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
Federal Reserve improves economic forecast
What does this mean? Continued improvements in the economic recovery as the result of the successful roll-out of several vaccines prompted the Fed to revise their forecast to the upside.
In its mid-March meeting, The Federal Reserve improved its economic forecast notably from its previous forecast in December 2020. The median estimate for GDP growth in 2021 rose from 4.2 to 6.5 percent, the year-end unemployment rate fell from 5.0 to 4.5 percent, and the annual PCE inflation rate is projected to rise from 1.8 to 2.4 percent before falling back to 2.0 percent in 2022.