Economic Event | Period | Economic Survey | Actual Reported | Original Prior | Revised Prior |
MBA Mortgage Applications | Oct 25 | -- | 6.4% | -0.6% | -- |
ADP Employment Change | Oct | 150K | 130K | 166K | 145K |
CPI MoM | Sep | 0.20% | 0.20% | 0.10% | -- |
CPI Ex Food and Energy MoM | Sep | 0.20% | 0.10% | 0.10% | -- |
CPI YoY | Sep | 1.20% | 1.20% | 1.50% | -- |
CPI Ex Food and Energy YoY | Sep | 1.80% | 1.70% | 1.80% | -- |
CPI Core Index SA | Sep | 234.7 | 234.589 | 234.302 | -- |
CPI Index NSA | Sep | 234.086 | 234.149 | 233.877 | -- |
Why don’t we stop for a second and recap the Fed’s record relative to its stated economic goals. Let’s see, the Fed is not winning on its unemployment goal, and not winning on its inflation goal.
ADP Employment Change came in at 130,000 jobs added. Economists expected 150,000. The prior period’s number was reduced to 145,000 from the original number of 166,000. Mark Zandi of Moody’s estimates that a number of about 125,000 is a zero growth number, a number that at or below no longer reduces unemployment. Why? Well, you have to remember people who no longer are looking for jobs are not counted. And if you recall the email from last week, that number has been stubbornly growing. The 130,000 increase in employment was the smallest in six months and followed a revised 145,000 gain in September that was weaker than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of 39 economists surveyed by Bloomberg called for an advance of 150,000 jobs. The monthly figures are the first to show how employment fared during a 16-day partial federal shutdown .
The cost of living in the U.S. rose as projected in September as fuel charges climbed, capping the smallest year-to-year gain in five months. The consumer price index increased 0.2 percent, matching the median forecast of 86 economists surveyed by Bloomberg, after rising 0.1 percent the prior month. Stripping out volatile food and fuel, the so-called core measure climbed 0.1 percent for a second month, less than projected.
With inflation running below the Federal Reserve’s goal, the central bank has more ‘flexibility’ to maintain its $85 billion-a-month bond buying program. However, the Feds buying program is kind of like pushing on a string at this point. Whatever good the Fed’s program may be doing is largely being offset by other market forces. So the relentless Fed purchasing of massive amounts of securities has produced little positive economic developments. And while monetary policy works with a lag, the Feds program has been in place since 2008 with no measurable benefit towards meeting its stated goals.
John Broussard
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
225-342-0013
jbroussard@treasury.state.la.us
