The economic landscape is poised for significant shifts as influential voices weigh in on current policies and projections. Chicago Fed Chief, Austan Goolsbee, has voiced concerns over the economic impact of former President Donald Trump's trade wars. Simultaneously, the Bank of England surprised investors with unexpected growth and inflation forecasts following a rate cut. Meanwhile, the U.S. Census Bureau's revised immigration data will play a crucial role in the upcoming jobs report, potentially altering perceptions of job growth during the Biden administration.
Goolsbee's apprehensions about Trump's trade wars resonate with liberals and some conventional thinkers who perceive the stance as damaging rather than reformative. The ongoing debate underscores the complexity of trade policies and their long-term implications on the economy. Goolsbee's perspective adds a layer of expert analysis to the discourse, highlighting potential economic disruptions.
In England, the Bank of England's decision to deliver a rate cut, as anticipated on Thursday, sent ripples through financial markets. The BOE's freshly updated forecasts for growth and inflation left investors taken aback, leading to an initial dovish reaction to the report. These forecasts suggest a cautious outlook on economic recovery and have prompted investors to reconsider their strategies.
The U.S. Census Bureau's release of new figures using an updated methodology marks a pivotal moment. This change aims to better capture recent immigration trends and address previous underestimations of population growth. The revised figures indicate significantly faster population growth in 2023 and 2024, which will be reflected in Friday's jobs report. This report will mark the first use of these new estimates and is expected to show a substantial one-month increase in nearly every measure.
"But for a variety of reasons, the Census Bureau has struggled to fully account for the surge in immigration in recent years, leading it to underestimate the rate of population growth. In December, the bureau released new figures using an updated methodology that its experts believe better captures recent immigration — and that showed much faster population growth in 2023 and 2024." – The NYT
The implications for job growth during the Biden administration are significant. The revision is likely to present weaker job growth than previously reported, potentially altering the narrative of economic recovery. However, experts emphasize that these updated numbers will not drastically change the fundamental understanding of a robust labor market.
"Still, the updated numbers aren’t likely to change the basic narrative of a solid labor market. They could even make the recent slowdown in hiring appear more muted, because they will make the large job gains in 2023 look smaller.” – The NYT
The government's approach to incorporating these revisions reflects consistency with past practices. Historical household-survey data will remain unchanged, while new population figures will manifest as a notable one-month surge across related metrics.
"But, consistent with its past practice, the government won’t revise any of the historical household-survey data. Instead, the new population numbers will show up as a huge, one-month increase in virtually every measure that is based on them.” – The NYT
Another significant development involves the U.S. service sector, where prices have been declining. This decrease has contributed to a downward slip in the 10-year yield, signaling lower cost pressures within the economy. This trend has not gone unnoticed by the Federal Reserve, which is likely to consider these shifting dynamics in its policy deliberations.
Treasury Secretary Bessent has highlighted Trump's preference for lower interest rates, although he refrains from directly asking the Fed to implement cuts. Instead, Trump focuses on reducing 10-year yields as a strategic goal.
"while Trump wants lower interest rates, he would not ask the Fed to cut them – putting the emphasis instead on getting 10-year yields down.” – TreasSec Bessent
The Briefing, known for its daily publication spanning over 25 years, serves as a trusted source for experienced analysis and insight into these complex economic developments. As stakeholders navigate these changes, The Briefing continues to provide clarity and context.