After eleven rate hikes since March of 2022, the Fed once again left their benchmark Federal Funds Rate unchanged at a range of 5.25% to 5.5%. This decision was unanimous and marks the fifth straight meeting they held rates steady. The Fed Funds Rate is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. The Fed has been aggressively hiking the Fed Funds Rate throughout this cycle to try to slow the economy and curb the runaway inflation that became rampant over the last few years.

What’s the bottom line? Despite some recent inflation readings that were hotter than expected, the Fed noted that three rate cuts are still expected this year. The Fed’s “dot plot” of member forecasts showed that 15 out of 19 members still expect cuts of between 50 and 100 basis points over the course of 2024.

March Madness means munchies! This Courtside Caramel Corn courtesy of Taste of Home will be a slam dunk with friends and family.

Pop 6 quarts of popcorn and set aside. Preheat oven to 250 degrees Fahrenheit. Grease 2 13×9-inch baking pans.

In a large saucepan, combine 2 cups packed brown sugar, 1 cup butter (cubed), 1/2 cup corn syrup and 1 teaspoon salt. Bring to a boil over medium heat and boil for 5 minutes, stirring occasionally.

Remove from heat, stir in 3 teaspoons vanilla and 1/2 teaspoon baking soda, and mix well. Pour sauce over popcorn and stir until well coated. Add popcorn to prepared baking dishes and bake for 45 minutes, stirring every 15 minutes.

Cool completely before serving. Store leftovers in an airtight container.

Housing data will share headlines with the Fed, starting with builder confidence for March from the National Association of Home Builders on Monday. Tuesday brings news on February’s Housing Starts and Building Permits, while Existing Home Sales data follows on Thursday.

The Fed’s meeting begins Tuesday, with their Monetary Policy Statement and press conference coming on Wednesday. Investors will be closely listening for news regarding the timing of rate cuts later this year.

Also of note, the latest Jobless Claims and an update on manufacturing for the Philadelphia region will be reported on Thursday.

Retail Sales rose 0.6% from January to February though this modest rebound was below estimates of an 0.8% gain. Sales in January were also revised downward from the originally reported 0.8% decline to a 1.1% decline when compared to December.

What’s the bottom line? After a strong holiday shopping season, consumer spending has cooled in the first quarter of this year. While January’s harsh weather certainly impacted sales at the start of the year, the growing use of credit cards and buy now pay later programs could also be contributing to slower spending as consumers pay back holiday season and other debts.

The Fed will be closely watching future Retail Sales reports, as the strength of our economy will also impact their monetary policy decisions this year.

The Producer Price Index (PPI), which measures inflation on the wholesale level, rose 0.6% in February, doubling market estimates. On an annual basis, PPI rose from 1% to 1.6%, well above the 1.1% that was forecasted. Core PPI, which strips out volatile food and energy prices, was hotter than expected with a 0.3% rise. The year-over-year reading remained at 2%, just above forecasts.

What’s the bottom line? Despite the upside surprise in the data, wholesale inflation is still well below 2022’s peak. February’s 1.6% year-over-year reading is a sharp drop from the 11.7% high that was reached a few years ago.

Remember, the Fed began aggressively hiking the Fed Funds Rate (the overnight borrowing rate for banks) in March 2022. These hikes were designed to slow the economy by making borrowing more expensive, lowering the demand for goods, and thereby reducing pricing pressure and inflation. After eleven hikes in this cycle, the Fed pressed pause at their last four meetings as signs of cooling inflation grew.

While the Fed is still expected to start cutting the Fed Funds Rate this year, these hotter than expected inflation readings could push back the timing of their plans. We will likely receive more guidance on Wednesday once this week’s Fed meeting concludes, and they release their latest Statement of Economic Projections.

The last update in December showed that Fed members projected a median of three rate cuts for this year. It will be important to see whether recent inflation and employment data impact these forecasts.

There were 209,000 Initial Jobless Claims filed in the latest week, marking a decline of 1,000 applications for new unemployment benefits from the previous week. Continuing Claims rose by 17,000, with 1.811 million people still receiving benefits after filing their initial claim.

What’s the bottom line? The latest Continuing Claims figure is much lower than the 1.9 million readings we’ve been seeing, but the decline is not due to improving conditions in hiring. The Bureau of Labor Statistics changed their seasonal adjustments, which has caused big revisions throughout the prior weeks’ reporting. Yet even with these adjustments, Continuing Claims are still trending higher compared to a year ago, showing that it’s become harder for some people to find new employment once they are let go.

On a related note, the latest small business optimism survey from the National Federation of Independent Business showed that small businesses are struggling on the labor front, with plans to hire and plans to increase compensation both hitting three-year lows.

The latest Consumer Price Index (CPI) showed that inflation rose 0.4% from January to February, coming in right around forecasts. CPI also rose from 3.1% to 3.2% year over year, which was above the expected unchanged reading. Core CPI, which strips out volatile food and energy prices, increased 0.4% while the annual reading fell from 3.9% to 3.8%. Both figures were slightly higher than estimates.

Rising shelter and energy costs were two key factors that helped push inflation higher last month.

What’s the bottom line? Inflation has fallen considerably after peaking in 2022, with the headline reading now at 3.2% (down from 9.1%) and the core reading at 3.8% (down from 6.6%). However, CPI was hotter than expected for both January and February, meaning inflationary pressures have been more persistent than the Fed would like.

March 13 is National Chicken Noodle Soup Day. Create the perfect comfort food with this quick and easy recipe from Allrecipes that yields six servings.

In a large pot, melt 1 tablespoon butter over medium heat. Add 1/2 cup each of chopped onion and chopped celery and cook until just tender, about five minutes. Add 4 (14.5 ounce) cans chicken broth, 1 (14.5 ounce) can vegetable broth, 1/2 pound chopped and cooked rotisserie chicken breast, 1 1/2 cups egg noodles, 1 cup sliced carrots, 1/2 teaspoon dried basil, 1/2 teaspoon dried oregano, and salt and pepper to taste.

Stir to combine and bring to a boil, then reduce heat and simmer for 20 minutes. Enjoy with your favorite crusty bread.

Inflation will be the key story, with February’s Consumer Price Index releasing on Tuesday and the Producer Price Index (which measures wholesale inflation) on Thursday. The Fed will be watching these reports closely, given that January’s readings were hotter than expected.

Also on Thursday, look for February’s Retail Sales and the latest Jobless Claims. Friday brings an update on manufacturing in the New York region.

Investors will also be closely watching Tuesday’s 10-year Note and Wednesday’s 30-year Bond auctions for the level of demand.

Black Knight released their Home Price Index for January, and home values rose 0.2% from December. Prices were also 5.6% higher than in January 2023.

CoreLogic’s latest Home Price Index showed that national home values fell 0.1% from December to January. While this monthly figure was different than Black Knight’s, CoreLogic reported a slightly higher level of annual appreciation, with prices 5.8% greater than a year earlier.

CoreLogic forecasts that home prices will hold steady in February and rise 2.6% in the year going forward, though it’s worth noting their forecasts tend to be on the conservative side historically. For example, CoreLogic originally forecasted that we would see 3% appreciation in 2023 but we saw 5.5%. Plus going back to 2021, they had forecasted a 6.6% decline in home values, and we saw a nearly 19% gain instead.

What’s the bottom line? The annual home price growth seen by CoreLogic and Black Knight has been echoed by other major indices like Case-Shiller and the Federal Housing Finance Agency, showing that great opportunities remain for building wealth through real estate.

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings declined slightly in January, falling from a downwardly revised 8.889 million in December to 8.863 million. The hiring rate dropped from 3.7% to 3.6% while the quit rate fell from 2.2% to 2.1%, suggesting there’s a lack of employers trying to entice workers with other offers.

What’s the bottom line? The number of job openings may be weaker than the headlines suggest since the rise in remote work has led to job listings being posted in multiple states more frequently. While the Fed watches this report to monitor slack in the labor market, there are flaws in the data.

Applications for new unemployment benefits were unchanged in the latest week, as 217,000 Initial Jobless Claims were filed. Continuing Claims rose by 8,000, with 1.906 million people still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims are still relatively low, however the latest Job Cuts report from Challenger, Gray & Christmas showed that announced layoffs in February were the highest total for that month since 2009. We could see a bump upwards in future initial claim filings as a result.

Meanwhile, Continuing Claims have been trending higher, with this latest reading being the second highest since November 2021. The data shows that once people are let go it’s more challenging for them to find new employment.

ADP’s Employment Report showed that private payrolls grew less than expected in February, as employers added 140,000 new jobs versus the 150,000 that had been forecasted. Most of the hiring took place in the services sector and in businesses with more than 50 employees.

What’s the bottom line? “Job gains remain solid. Pay gains are trending lower but are still above inflation,” said Nela Richardson, chief economist for ADP. On that note, annual pay for job stayers increased by 5.1%. Job changers saw an average increase of 7.6%, which was up from the prior month as pay gains for job changers accelerated for the first time in more than a year.

The Bureau of Labor Statistics (BLS) reported that there were 275,000 jobs created in February, which was stronger than the 200,000 new jobs that had been forecasted. However, revisions to December and January cut 167,000 jobs in those months combined while the unemployment rate rose from 3.7% to 3.9%, marking the first increase since October.

What’s the bottom line? While the headline job growth figure beat estimates, future revisions lower are a very real possibility, given that we continue to see this pattern from the BLS. Plus, it’s important to look at both surveys within the Jobs Report, which told two different stories regarding job growth.

The Business Survey is where the headline job number comes from, and it’s based predominately on modeling and estimations. The Household Survey, where the Unemployment Rate comes from, is considered more real-time because it’s derived by calling households to see if they are employed.

This Household Survey also has a job creation component, and it showed 184,000 job losses. Plus, February’s report included a sizeable increase in part-time workers (+51,000), while full-time workers fell by 187,000, suggesting some softening in the job market and economy overall.

Remember, the Fed began aggressively hiking the Fed Funds Rate (the overnight borrowing rate for banks) in March 2022 to try to slow the economy and curb runaway inflation. Following eleven hikes in this cycle, the Fed pressed pause at their last four meetings as signs of cooling inflation grew.

While the Fed has stressed that they don’t expect to begin cutting rates until inflation is “moving sustainably toward 2 percent,” a cooling job market is one factor that could encourage members to cut rates sooner rather than later.

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.2% from November to December after seasonal adjustment. Home values in December were also 5.5% higher than a year earlier, with S&P DJI’s Head of Commodities, Brian D. Luke, noting that the index “continued its streak of seven consecutive record highs in 2023” and “ten of 20 markets beat prior records.”

The Federal Housing Finance Agency’s (FHFA) House Price Index also saw home prices rise 0.1% from November to December and 6.6% year-over-year, with their index setting new record highs in home prices every month since February. Note that FHFA’s report measures home price appreciation on single-family homes with conforming loan amounts, which means it most likely represents lower-priced homes. FHFA also does not include cash buyers or jumbo loans, and these factors account for some of the differences in the two reports.

What’s the bottom line? Last year was a strong one for appreciation, with the final numbers for 2023 showing that home prices were up 5.5% per Case-Shiller and 6.6% per FHFA. Previous reporting from Black Knight (5.6%) and CoreLogic (5.5%) also reflected similar home price growth for last year. These indexes show that homeownership continues to provide opportunities for building wealth through real estate.