Economic Data Disappoint
If you're looking for reasons for the
Fed
to keep its interest rate policy on a steady course, then two economic reports Thursday might be a good start.
Check out the latest jobless and consumer data.
Weekly jobless claims jumped 20,000 to 350,000 in the most recent week, when economists expected a decline to 320,000. It was the worst showing in weeks.
Meanwhile, both personal income and spending rose less than expected in February. Income edged up 0.3% -- hardly reason to worry about wage inflation -- vs. a 0.4% gain. Spending, or consumption, rose 0.5%, vs. forecasts for a 0.6% gain.
More importantly, an inflation gauge watched closely by Fed chief Alan Greenspan was less than expected; the core personal consumption expenditure price index rose 0.2%, down from a 0.3% gain in January.
Renewed concerns about inflation and speculation that the Fed is prepared to take a more aggressive approach in raising interest rates have put investors on edge recently. Some investors now expect the Fed to abandon its measured approach of raising rates by 25 basis points at a time and make a 50-basis-point move in the near future. As a result, the yield on the 10-year note is now near 4.60%, having briefly traded at 4% in early February.
For hopeful investors, Thursday's lukewarm economic data may bode well for Friday when the February jobs report is released. Economists expect nonfarm payrolls to show a 220,000 increase after a larger-than-expected one in January. Such an increase is modest by historical standards.