The Trial Balance is CFO’s weekly preview of stories, stats, and events to help you prepare.
Part 1: Fed presidents Goolsbee and Kashkari discuss inflation
Inflation continues to be a sticking point for the economy and those responsible for monetary policy. The Fed’s goal of an inflation rate of 2% by the end of the year is still within grasp, but Q1’s bump in the road has Fed presidents cautious before making any movements with interest rates. Indeed, the Fed is still expected to hold rates steady in its June meeting, per the CME FedWatch Tool.
Over the weekend, two Federal Reserve presidents spoke on the issue, indicating that they are in a wait-and-see approach. Appearing on Bloomberg TV, the Federal Reserve Bank of Chicago President Austan Goolsbee said there’s no evidence that inflation is stalling out at 3%. “2023 was a fabulous year for the dual mandate of the Fed — inflation fell by as much as it has ever fallen, and it occurred without a big recession,” Goolsbee said.
Goolsbee was joined by Neel Kashkari, the Minneapolis Fed President, on CNBC to discuss further what is in store for the rest of the year. The discussion centered around whether the U.S. economy is in a restrictive state.
“Investors keep saying, ‘Why does the Fed keep saying financial conditions are tight? They’re not tight,’” Kashkari said. “We think that monetary policy works through financial conditions … if the business community doesn’t think financial conditions are tight, that makes me question, maybe we’re not as restrictive as we would have guessed.”
Goolsbee believes we are more likely in a restrictive state, but that the “data dogs need to do some sniffing. Are we on the path like last year? … Or did we use up all our good luck and now the beginning of this year is a sign of overheating?”
Kashkari noted the economy saw tremendous gains in the supply side of the economy last year that drove much of the disinflation experienced. But, will 2024 bring more supply-side gains? “I’m suspect of that,” he said. “Now it’s up to monetary policy to bring inflation from 3% to 2%, and that’s why my question of how tight are conditions right now is paramount.”
Both presidents agreed more data analysis and time is needed before they can get a sense of a 2% inflation by the end of 2024 is possible.
Part 2: The week ahead
Here’s a list of important market events and Fed speakers slated for the week ahead.
Monday, May 13
- NY Fed one-year inflation expectations, April
Tuesday, May 14
- NFIB Small Business Optimism, April
- Producer price index, April and YoY
- Fed Gov Lisa Cook speaks
- Fed Chair Jerome Powell speaks
Wednesday, May 15
- Consumer Price Index, April and YoY
- Core CPI, April and YoY
- U.S. retail sales
- Empire State manufacturing survey
- NAHB housing market index, May
Thursday, May 16
- Philadelphia Fed manufacturing survey
- Import prices, April
- Export prices, April
- Industrial production, April
Friday, May 17
- U.S. leading economic indicators, April
- Fed Governor Christopher Waller speaks
Part 3: Q&A with PCAOB Chair
Reporter Adam Zaki will publish a Q&A with Erica Williams, chair of the PCAOB. Zaki and Williams discuss what working alongside former President Obama was like, instilling culture and ethics at the PCAOB, what the threshold for an efficient audit is and more. (5/16)
