The Great Gold Unwind

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the October 2024 Survey of Consumer Expectations, which shows that households’ inflation expectations declined slightly at the short-, medium-, and longer-term horizons. Labor market expectations improved with households reporting a lower likelihood of higher unemployment and job loss, and a higher likelihood of finding a job if they were laid off. Perceptions of credit access and expectations for future credit access both improved in October, and households reported a lower likelihood of missing a minimum debt payment over the next three months. The main findings from the October 2024 Survey are: Inflation • Median inflation expectations fell at all three horizons in October. One-year-ahead inflation expectations declined by 0.1 percentage point to 2.9%, three-year-ahead inflation expectations declined by 0.2 percentage point to 2.5%, and five-year-ahead inflation expectations declined by 0.1 percentage point to 2.8%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectatio post: NEW YORK FED SURVEY: U.S. HOUSEHOLDS IN OCTOBER SAW INFLATION RUNNING AT 2.9% OVER NEXT YEAR, LOWEST 1-YEAR OUTLOOK IN 4 YEARS post: NY FED: CONSUMERS' 3-YEAR INFLATION VIEW DOWN TO 2.5% IN OCTOBER FROM 2.7%, 5-YEAR VIEW TO 2.8% FROM 2.9%.

Thank you for that kind introduction. I thought I’d use my time to share how I see the economy today and where we may be headed. I caution you these are my thoughts alone and not necessarily those of anyone else on the Federal Open Market Committee (FOMC) or in the Federal Reserve System. I want to start by calling out the strength of the overall data. Twelve-month headline PCE inflation has come all the way down to 2.1 percent. GDP growth for the third quarter was 2.8 percent, well above its trend rate of just under 2 percent. The unemployment rate is 4.1 percent, near estimates of its natural rate. I don’t want to jinx things, but you have to acknowledge that — as of today — the economy looks pretty good. I think it is fair to say: No one predicted this. When the FOMC raised rates aggressively in 2022 and 2023, a recession was in pretty much everybody’s forecast. The traditional recession indicators were flashing. The yield curve inverted in 2022 and stayed that way for over two years. The Conference Board’s Leading Economic Index has been negative for 2 1/2 years. Shocks like the failure of Silicon Valley Bank and the conflict in the Middle East looked like they would complicate the outlook further. Yet here we are. How did we get here? I’d, of course, love to give the FOMC full credit, and I hope you think our efforts to quiet inflation have post: RICHMOND FED'S BARKIN/BALTIMORE: ECONOMY AND FED POLICY 'IN A GOOD PLACE;' NOT GOING TO MAKE ANY FORECASTS #Barkin #FederalReserve : post: BARKIN: INFLATION MIGHT BE COMING UNDER CONTROL OR MIGHT RISK GETTING STUCK ABOVE FED'S 2% TARGET