Global| Mar 16 2020FOMC Lowers Fed Funds Rate to Zero Citing Coronavirus
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve lowered the target for the Fed Funds rate by 100 basis points to a range of 0.00% to 0.25%. In the Fed's press release, it stated "The coronavirus outbreak has harmed communities and disrupted economic activity in [...]
The Federal Reserve lowered the target for the Fed Funds rate by 100 basis points to a range of 0.00% to 0.25%.
In the Fed's press release, it stated "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States."
Additionally, the Fed launched a $700 billion quantitative easing program designed to add further liquidity to the economy.
The decision was unanimous amongst FOMC members.
The full text of the FOMC statement can be found https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm
| Current | Last | 2019 | 2018 | 2017 | 2016 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate Target | 0.0% - 0.25% | 1.00% -1.25% | 2.16% | 1.83% | 1.00% | 0.40 |
\Empire State
Manufacturing Conditions Strengthen
by Tom
Moeller March 16, 2020
The Empire State Manufacturing Index of General Business Conditions increased to a nine-month high of 12.9 during February, extending modest gains during the prior two months. A reading of 5.0 had been expected in the Action Economics Forecast Survey. Thirty-four percent of survey respondent reported improved business conditions while 21 percent reported a decline.
The ISM-Adjusted Index, constructed by Haver Analytics, surged to 56.9, the highest level since June 2018. During the last 20 years, there has been 59% correlation between the level of the index and q/q change in real GDP.
Leading this month's improvement was the new orders index as it surged to 22.1, the highest level since September 2017. The shipments series also jumped roughly ten points. The delivery times returned to positive territory, indicating slower delivery speeds. The inventories index surged to a two-year high while the unfilled orders index turned positive after falling for roughly one year.
Working lower was the employment series to 6.6, its lowest level in six months. Nineteen percent of survey respondents reported increased hiring while nine percent reported a decline. During the last 20 years, there has been a 73% correlation between the index level and the m/m change in factory sector payrolls. The average workweek reading also turned negative.
The prices paid index deteriorated to 25.0. Thirty percent of respondents reported higher prices while five percent reported a decline. The prices received showed more strength with a rise to 16.7, its highest level since March of last year.
The Expected General Business Conditions index eased slightly to 22.9 and remained well below its late-2018 highs. Expected new orders and shipments eased while inventories collapsed. The employment index edged higher, but prices paid slipped.
The Empire State figures are diffusion indexes, which are calculated by subtracting the percentage of respondents reporting declines from the percentage reporting gains. Their values range from -100 to +100. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
