Publications

The Wall Street Journal reports that the Federal Reserve has raised its benchmark interest rate by 25 basis points and is likely to raise rates two more times this year. The Fed had previously expected to raise interest rates just three times this year, however a sub-4% unemployment rate as well as strengthening consumer and investment spending have caused officials to reevaluate their outlook for 2018. WSJ

According to the Wall Street Journal, borrowing costs are surging to multiyear highs as the Federal Reserve continues normalizing interest rates. Economists say that rising wages, low unemployment, and recent tax cuts should help offset rising interest rates for the time being, although borrowing costs may limit the ability of some consumers to purchase new homes or cars. WSJ

Paul Hannon of the Wall Street Journal writes that Eurozone industrial activity fell more sharply than expected in April, which may signal a looming economic downturn. Robust industrial activity was a key driver of surprisingly strong Eurozone economic growth in 2017, but trade tensions with the U.S. may be harming business confidence and might lead to a larger economic slowdown. WSJ

In a Wall Street Journal op-ed, former chair of the Council of Economic Advisers Martin Feldstein argues that the Federal Reserve will be unable to manage the labor market distortions caused by automation. Feldstein contends that labor market shocks will be caused by supply-side disruptions rather than demand-side disruptions, and the normal response of easy-money policies will not help the economy return to full employment. WSJ

Justin Lahart of the Wall Street Journal reports that the Fed’s expected rate hike this week will likely push the U.S. yield curve closer to an inversion. Lahart writes that Fed officials may also raise their forecast of total rate hikes in 2018 from three to four, which could signal that the economy is running hotter than expected. WSJ

The Wall Street Journal reports that U.S. farmers, who are already losing sales in China due to recent trade conflicts, will now face tariffs from Mexico and potentially Canada as well. China, Mexico, and Canada represent a significant portion of demand for U.S. agricultural exports, and given already-low agricultural commodity prices, U.S. farmers stand to suffer if tit-for-tat tariffs escalate. WSJ