The Fed held rates steady, but two dissenters wanted a hike now, and strong growth and rising inflation are keeping a December increase firmly on the table.
- The Federal Reserve held rates steady in a 10-to-2 vote, with both dissenters wanting an immediate quarter-point hike.
- Its statement also upgraded growth to strong and called inflation still elevated, while Warsh declined to commit on December until he sees more data.
- Fed funds futures now put the odds of a December hike at about 82%, down slightly after Thursday's data but higher than a week ago.
- Thursday's GDP report showed the economy grew 3.4% last quarter, faster than expected, with investment doing more of the lifting than consumers.
- The Fed's preferred inflation gauge rose 3.6% from a year ago in September, with core climbing to 3.1% and prices jumping 0.5% in a single month.
- Income and spending figures for September show take-home pay fell after inflation and spending went nowhere, with gasoline taking the biggest bite.
- Consumer surveys diverged, as Conference Board confidence jumped while University of Michigan sentiment barely moved and respondents there expect inflation near 5% over the next year.
- The National Association of Realtors reported pending home sales at the lowest level on record, as mortgage rates remain above 7% and buyers stay on the sidelines.
- Housing starts data show apartment starts down about 26% from a year ago, though permits picked up in September, suggesting some builders are lining up projects for later.
For more information on the state of the U.S. Economy, including forecasts, watch all the episodes of the Economy Express series.
