- The Federal Reserve raised the target range for its federal funds by 25 basis points to 0.75% – 1% at its March meeting, reflecting increased confidence in the strength of the economy. The decision was in line with market expectations as the labor market strengthened and economic activity continued to expand at a moderate pace. This was the third rate increase since the 2008 recession, when the Fed Funds target rate was reduced to 0% – 0.25%. We expect to see two more interest rate hikes this year as the Fed aims for a gradual normalization of monetary policy.
- A measure of consumer confidence in March grew to its highest level in 16 years, according to the Conference Board, and U.S. home prices rose in January at their fastest pace in 31 months, spurred in part by a pickup in job growth; the unemployment rate declined to 4.7% last month. The Commerce Department revised fourth quarter GDP up to 2.1% from its previous estimate of 1.9% and reported that consumer inflation in February rose 2.1% from the previous year. This is the first time this has exceeded the Fed’s 2% target in over five years. Moderate oil prices might hold down the inflation index, but wages are climbing at the fastest pace since the recession ended and prices for commodities other than oil, including steel, have increased.
- The much hyped repeal of the Affordable Care Act, “Obamacare,” failed when President Donald Trump and GOP leaders pulled their bill to repeal the law off the House floor just before the House was due to vote on it. Healthcare and related spending are deeply entwined with the wider economy. Last year, U.S. health-care spending accounted for roughly 18% of GDP. It had become clear the repeal would fail as Republican lawmakers could not come to agreement over a replacement for the existing health law. This was a blow to President Trump, who campaigned on a promise to repeal the law. Attention quickly moved toward overhauling the tax code.
- Football in the desert? The National Football League’s owners voted to allow the Oakland Raiders to relocate to Las Vegas. The league has long been opposed to gambling, but Las Vegas has evolved as an entertainment site as well as a gambling destination. The city is viewed as a growing market and a unique tourist destination, and currently has no major professional sports franchise. Las Vegas will gain added visibility from millions of television viewers and stands to benefit from weekend visits by Raiders’ fans. Amazon agreed to pay about $50 million for rights to stream 10 Thursday night football games, about five times more than Twitter’s arrangement last year.
* This commentary reflects the opinions of Welch & Forbes based on information that we believe to be reliable. It is intended for informational purposes only, and not to suggest any specific performance or results, nor should it be considered investment, financial, tax or other professional advice. It is not an offer or solicitation.
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