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Federal Reserve Chairman Jerome Powell speaking at the National Association for Business Economics (NABE) Annual Economic Policy Conference emphasized that there is an “obvious need” to quickly return monetary policy to a “more neutral level” and to move to more “restrictive levels” if required to restore price stability. The Fed chair characterized the labor market as “very strong” and inflation as “much too high”. Powell noted the progress made by the FOMC last week to achieve price stability with its raising of the policy interest rate for the first time since the start of the pandemic. The Fed chair also confirmed that “ongoing rate increases will be appropriate”, and that a balance-sheet reduction is coming soon. Addressing the state of the labor market, Powell touted a record 1.7 job openings for each person looking for work, the record number of workers quitting existing jobs for higher-paying ones, and wages increasing at the fastest pace in decades, with the gains strongest for those at the lower end of the wage distribution. Turning to inflation, the Fed chair attributed the severity and persistence of supply-side frictions combined with strong demand for durable goods with producing “surprisingly high inflation”.
The U.S Census Bureau reported that sales of newly built homes fell 2.0% in February from a downwardly revised January rate of 788,000. The February seasonally adjusted annual rate of 772,000 is down 6.2% from a year earlier and represents the second straight monthly decline. Regionally new home sales increased in the Northeast (+59.3%) and Midwest (+6.3%), while sales decreased in the West (-13.0%), and South (-1.7%). The average sales price for a new home sold in February was $511,000, while the median price was $400,600, a 10.7% increase from a year ago. There were 407,000 new homes for sale as of the end of February, the vast majority of which were either under construction (259,000) or not yet started (105,000), these numbers are significant given rising mortgage rates and two consecutive months of sales decline. The supply of new homes for sale increased to a 6.3-month supply in February.
The U.S Census Bureau reported that new orders for durable goods decreased 2.2% to a seasonally adjusted $271.5 billion in February. The decrease follows four consecutive monthly increases, January reported a 1.6% increase. Total durable goods orders are up 14.2% year over year. Much of the decrease in the headline number is attributable to a 5.6% drop in transportation equipment, with orders for non-defense aircraft and parts down 30.4%. Automobile makers also reported a 0.5% drop in new orders. Excluding the steep decline in orders for transportation equipment, durable goods orders fell by 0.6% in February after a 0.8% increase in January with declines in orders for machinery, computer and electronic products, and primary metals all contributing. Excluding transportation, “core” durable goods orders decreased 0.3%, the first decline since February 2021, and follows a 1.3% increase in January. Excluding defense, orders were down 2.7%.
Tuesday March 29 – JOLTs Job Openings (February)
Wednesday March 30 – GDP (QoQ) (Q4)
