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2015 was a good year for the economy, according to a report from the Census Bureau released this Tuesday, which showed a significant jump in household income in all brackets, as well as a drop in poverty, and an increase in health insurance coverage last year. Thanks mainly to job growth (as opposed to wage growth), the median household income rose 5.2% to $56,000, which is the largest Y/Y increase since the beginning of this recordkeeping in 1967. However, the median income is still 1.6% lower than it was in 2007 when adjusted for inflation. Economists cheered the report, while cautioning that the gains must continue.
Federal Reserve Governor Lael Brainard’s dovish speech on Monday reinforced expectations that there will be no change to the federal funds rate this September. However, there is still not a consensus on how cautious to be regarding a rate increase; several Fed officials have spoken out in favor of raising the rate before the end of the year.
The consumer price index (CPI) increased at a higher rate than expected, 0.2% in August, and 1.1% Y/Y. The core CPI (less food and energy) was up 0.3% M/M and 2.3% Y/Y, while food and energy price indices were flat in August. This is a welcome report for the Federal Reserve, which has been wanting inflation to pick up before raising the federal funds rate.
Upcoming Economic Reports
Tues September 20 — Housing Starts (indicator of near-term economic activity)
Thurs September 22 — Existing Home Sales (gauge of economic momentum)
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