ISCA
Expecting Unemployment to rise
Occurs 2.5 years after Fed Funds begin a rate hike cycle on average
The way the economy slows down AFTER a Fed tightening cycle tends to be fairly consistent across time.
First housing slows, then we see leading economic indicators like PMIs begin to turn lower. This is always followed by a broader profit slowdown.
It is here where the difference between a slowdown and a recession occurs - that is, whether employment takes a hit after a profits slowdown. Weakness in housing eventually has a negative impact on the labor market.
However, the Fed hiked much slower than any prior period. Initial claims could creep higher and go undetected by many.
Keep an eye on employment data in the weeks and months to come.
- RH
Expecting Unemployment to rise
Occurs 2.5 years after Fed Funds begin a rate hike cycle on average
The way the economy slows down AFTER a Fed tightening cycle tends to be fairly consistent across time.
First housing slows, then we see leading economic indicators like PMIs begin to turn lower. This is always followed by a broader profit slowdown.
It is here where the difference between a slowdown and a recession occurs - that is, whether employment takes a hit after a profits slowdown. Weakness in housing eventually has a negative impact on the labor market.
However, the Fed hiked much slower than any prior period. Initial claims could creep higher and go undetected by many.
Keep an eye on employment data in the weeks and months to come.
- RH