Inflation adds to rate woes for economy
The latest data on the number of layoffs is expected to come out in August, when retail sales are expected to rise by 6.2 percent in 2016. That is already higher than economists polled by The Boston Globe expected but far lower than in 2013 and 2014.
“All the data points we’ve had before is that, in particular for the US, you need retail sales to be expanding and rising. What we’re seeing, we’ll be monitoring as the next quarter unfolds,” said Mark Zandi, chief economist at Moody’s Analytics in New York. “That won’t help us with our long-run projection for economic growth, but it might help us when you look at a longer view as we move into next year.”
The government, by contrast, recently slashed its key economic forecast for 2017 by about 0.1 percentage point, to 1.4 percent, from previous forecasts of 2 percent growth. The economy grew 3.7 percent in 2016, down from an 8.2 percent average since 2011, but economists say the slow pace in economic growth has helped keep inflation low and caused the value of the dollar to tumble. They’re confident inflation will improve in the upcoming year and reach 2.2 percent in fiscal year 2018.
The Fed on Friday raised its inflation forecast for next year by 0.1 percentage point, to 2.8 percent, from a previous 1.6 percent projection.
To reach its 2 percent mark, the Fed w바카라ould have to lift its inflation target more than 1 percentage point. That would still leave the economy only slightly above the Fed’s 2 percent target.
The Fed already moved to raise its target for U.S. inflation to 2.5 percent in August as the economic news continued to be tough. A separate rise in the Bank of Japan’s interest rates could also triapronxgger more market interest rate moves this year, in anticipation of the central bank’s planned June rate hike, as well as an expected increase in spending by the federal government.
“If the Fed was going to raise their target to 2 percent, there is going to be some political discussion about that in November,” said Richard Pomerantz, chief economist at TD Securities in Chicago. “So at some point the question would become do you start lifting your target and then do the economy really perform as if they were going to do it?”
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