Spot The "Data Dependent" Fed Policy
"Data dependent" or "making it up as they go along?"
Last week's deluge of data provided a needed update on the state of the U.S. economy, specifically with GDP confirming a reacceleration in growth during the second quarter and the employment report pointing to continued tightening in the labor market. Additionally, the FOMC statement was more eventful than anticipated, with important changes to qualifications on the labor and inflation markets.
As the chart above depicts, looking at a variety of metrics including payrolls, the unemployment rate, initial jobless claims, quit and openings rates, and wage and inflation acceleration, Federal Reserve tightening may be warranted in the near to medium term.
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