The trajectory of the unemployment rate will be key to whether Fed tightening resumes.
U.S. employment growth is moderating, but not by enough to stop more Fed rate hikes in 2019.
We can see the meaningful risk of a recession starting as soon as 2020.
We continue to forecast no let-up from the Fed’s quarter-point-per-quarter tightening pace any time soon.
The possible need for policy to get restrictive, not just neutral, is likely to become a regular talking point for Fed officials in the months ahead.
There is no way to know the precise level, and it can change over time.
HFE’s Chief U.S. Economist Jim O’Sullivan answers questions about the outlook for wages, inflation and Fed tightening this year and next.