The Fed could actually reduce the prices next week after the Bureau of Labor Statistics report on Friday showed that the non-agricultural payroll increased 177,000 seasonally adjusted for the month, slightly below 185,000 revised downwards in March, but above the Dow Jones estimate for 133,000.
Vicky Pryce, who works as chief economic advisor at the Center for Economics and Business Research, said the Fed would monitor these work figures before their meeting next week. She said political decision -makers considered these pay figures as a clear signal of what the country's commercial climate is like at the moment.
Vicky stressed that several surveys already show that companies strongly reduce hiring plans due to all the mess concerning commercial policy. No one wants to take big risks when they do not know what type of commercial barrier could hit next.
Vicky too mentioned A brewing problem that has not even made its doors yet in work data. Some federal employees have already been informed that they were losing their jobs, but these layoffs have not yet presented themselves in employment reports.
This blow always happens unless there is a kind of reversal. Vicky equaled this to continuous instability, including disturbances of companies like Tesla, where Elon Musk would have recently left. The whole economy feels unstable and companies react while holding back.
Gel hiring propagates while prices throw businesses in chaos
Next week, the Fed will have to decide what to do with all of this. Most people always expect them to hold stable. But Vicky is not so sure. She said recent economic figures are trembling enough for a drop in rate cannot be excluded. She reminded everyone that GDP has shrunk in the first quarter. Even if the annualized rate shows only a drop of 0.3%, it is still a large red flag. It is not a clear fall, but it means that the economy does not really develop.
Vicky explained that April's PMI data show that manufacturing becomes hard. Even the service sector, which had been more stable, slows down now. She said that the service industry “develops” – in the future. All this indicates that the economy blocks, does not gain in force.
So what's already preventing the Fed from cutting? Inflation. They always try to keep a lid on it. But even with this concern, Vicky said that a drop in rate could still occur soon. If this does not come next week, it will come shortly after. “The economy definitively shows signs of a slowdown,” she said.
The European economy also feels burning
The euro area is in a similar waste. Inflation remained stable at 2.2%, which is technically close to the objective of the ECB. But Vicky clearly said that central bankers are still nervous. EU growth obtained a small bump in the first quarter.
But they were just importers who were trying to beat the tariff deadlines. The companies rushed to send goods before new charges arrive. This has accumulated stocks in the United States and temporarily made Europe stronger than it really was.
The latest April data show that growth does not stick. Manufacturing is always narrowing. It does not collapse either. The services, which had been a stronger area in certain countries, are now slowing down.
Governments and the European Commission are already launching more expenses in the mixture, trying to avoid a deeper crisis. This includes budget increases and new support packages. Vicky said the rate reductions are still on the way, probably faster than people expect it. She said we could even see another in June. The ECB is already ahead of the Fed on this front, and Vicky said they had appealed.
She stressed that in countries where rates have already dropped, mortgage loans reproduce. People are surprised, but mathematics make sense – basic rates mean easier loans. And this trend is at the price now. Everyone expects low rates.
Vicky wrapped himself saying that more rate drops “arrive definitively”, both in Europe and the United States, while political decision-makers rush to manage the benefits.
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