Busy Day in Economics for a Wednesday

First, we had the Federal Reserve's Open Market Committee holding their benchmark interest rate, which is not a surprise. for a couple of reasons, first, the numbers that they care about, and GDP both remain relatively strong, and second, they HAD to do this to show their independence from Donald Trump.

The Federal Reserve has kept interest rates on hold for the first time since July, as chair Jay Powell said the US central bank was in no rush to cut them despite Donald Trump’s relentless campaign to drastically lower borrowing costs.

The Fed on Wednesday left its main interest rate at a range of 3.5 to 3.75 per cent, following three straight quarter-point reductions. The decision matched Wall Street’s expectations.

Powell said after the meeting that with the economy growing at a robust rate, and the jobs market steadying in recent months, rates did not appear to be in “significantly restrictive” territory.

………

Official statistics released last week showed annualised GDP growth of 4.4 per cent in the third quarter of 2025. The Atlanta Fed has said that could jump as high as 5.4 per cent in the fourth quarter.

Rather unsurprisingly, the Trump toadies dissented, despite inflation being higher than what the Fed Targets.

However, governor Christopher Waller, one of four candidates left in the race to replace Powell as chair when his term ends in May, dissented, calling for a quarter-point cut. Stephen Miran, a staunch Trump ally who was appointed a governor last year, also called for a quarter-point cut.

The objections came as central bankers attempt to balance their dual mandate of price stability and full employment. The Fed’s preferred personal consumption expenditures inflation gauge registered 2.8 per cent in November, well above its 2 per cent target.

I'll not go into the Fed Kremlinology any more deeply here, you can find that from a variety of public sources, but I do want to note that US consumer confidence fell to its lowest level since May 2014, which ain't good.

US consumer confidence has collapsed to its weakest level in more than a decade, outstripping its pandemic lows and fuelling concerns about the health of the world’s biggest economy.

The Conference Board’s consumer confidence index fell to 84.5 in January, well below market expectations and the lowest since May 2014.

“Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,” said Dana Peterson, chief economist at the Conference Board, a think-tank.

The bleak consumer mood despite recent bumper GDP growth and strong spending data will stoke concerns that the spoils of America’s economic gains are not being evenly distributed.

Rather unsurprisingly, the obscenely wealthy have a better view of the economy than the rest of us. 

Now there's a shock.