January 2019 Economic Recap
As expected, the FOMC voted to hold interest rates steady in January following the rate hike at the December meeting. Notably, the Fed adjusted its language regarding the future path of rates, emphasizing “patience” in its next moves. This suggests that the Fed has reached somewhat of an inflection point, where the next move for rates is not necessarily higher. In fact, despite the most recent SEP projection of two rate hikes in 2019, the market is now pricing in a greater likelihood of a cut than a hike.
On the fiscal side, the longest government shutdown in history came to an end after 35 days. Most analysts estimate that the shutdown knocked a few tenths of a percent from fourth quarter growth; this seems to have been confirmed by weak retail sales data for December. Some of this loss could be recovered in the first and second quarter of this year, as federal workers recover back pay and act on previously delayed purchases.
For a deeper consideration of the economic data released during January, please follow the links below: