Weekly Economic Update: May 8, 2023

Presented by Nicholas Wealth Management

Fed Hikes Again, Hints at Pausing: The Federal Reserve last week raised the target for its interest rate benchmark, the federal-funds rate, by another quarter percentage-point. This marked the 10th increase in just over a year and pushed the target rate range to 5.00% ‒ 5.25%. In an accompanying statement, the Fed reiterated that it is "strongly committed to returning inflation to its 2% objective." Notably, however, officials removed language from previous statements that stated additional increases in rates may be necessary, signaling that the central bank may pause rate hikes for the time being while evaluating on-going economic and financial developments and the cumulative impact of prior rate increases. April Jobs Report Mixed: The Labor Department reported last week that employers added 253,000 jobs in April, ahead of economists' expectations. However, previously-reported gains for the prior two months were revised downward by a total of nearly 150,000. This put the average number of additions from February to April at 222,000, the lowest three-month tally since January 2021. Sectors seeing the most new jobs in April included professional and business services, healthcare, and leisure and hospitality. With the job growth in April, the unemployment rate decreased to 3.4%, its lowest level since 1969. CPI Inflation Data: According to the Labor Department's consumer price index, inflation in the US decreased by 4.9% YoY in April, which is the smallest yearly increase since April 2021, offering a glimpse of relief to Americans. The decrease is attributed to lower prices of groceries, as they decreased for a second straight month, offsetting a 3% increase in gasoline prices.

The core consumer price index, which excludes volatile food and energy items, rose 0.4% from the previous month, lowering the annual increase from 5.6% to 5.5%.

Source: Gallagher Insurance, Risk Management and Consulting