KPMG Economics

Economic Coordinates

Explore analysis of key data indicators, such as job creation and the labor market, consumer spending, inflation, investment, housing and monetary policy. These combined data points are indicators of the overall health of the economy.

• Trump is getting the lower interest rates he demanded from everyone but the Fed
  The European Central Bank cut rates on Thursday, the Bank of Canada did as well on Wednesday, and the Bank of England is likely to do so next week – steps that, with the Fed in a holding pattern on rates, could strengthen the value of the dollar and further complicate Trump's trade goals by making imports cheaper and U.S. exports more expensive. Inflation is nearly contained, but the Fed sees enough uncertainty and risk on the horizon that it has moved to the sidelines, at least for now. "The Federal Reserve is really in a sort of policy purgatory," said Diane Swonk, chief economist at KPMG, noting that Powell's replies to reporters' questions on Wednesday were "peppered with the phrases 'wait-and-see,' 'waiting to see,' 'on hold,' 'not in a hurry,' and 'will patiently watch,'" With the economy now being shaped by an administration that has launched dozens of executive orders and with tariff announcements perhaps coming soon, "the Fed doesn't know what is next," Swonk said.
  January 31, 2025 | Reuters

• Could the Fed hold interest rates steady all year?
  After their meeting Wednesday, Fed officials held interest rates steady in a range of 4.25%-4.5%. In December, Fed officials had penciled in two quarter-point cuts for 2025. Asked about the Fed's plans during his press conference, Powell said that it was in "no hurry" to cut interest rates. He added that the Fed wants to see further progress on inflation or a weakening job market before cutting more. Economists who are projecting the Fed is done cutting don't think either of Powell's two conditions for a cut will be met. Diane Swonk, chief economist at KPMG, described the Fed's policy as being in ‘a sort of policy purgatory.’ "The Fed doesn't know what is next, given the uncertainty surrounding the new administration's agenda," she said.
  January 30, 2025 | MarketWatch

• Donald Trump at risk for an unemployment "Valentine's Day massacre"
  President Trump's directive to halt federal grants and financial assistance could significantly impact the U.S. economy and unemployment rates, with potential job losses in state and local projects, research institutions, and non-profits. Diane Swonk, chief economist for KPMG, highlighted the critical timing of the freeze, noting that the temporary unfreezing of funds only lasts until February 3, and the impact on employment will depend on whether the freeze resumes. Swonk also pointed out that labor shortages may be exacerbated by immigration policies, affecting sectors reliant on immigrant labor. The temporary block on the funding freeze remains until a February 3 hearing, leaving federal agencies and fund recipients in uncertainty.
  January 29, 2025 | Newsweek
  
• The Fed is clearly worried tariffs may be more inflationary than previously, says KPMG's Diane Swonk
  Diane Swonk, KPMG chief economist, and CNBC’s Steve Liesman join CNBC's 'The Exchange' to discuss expectations for the Fed's next move.”
  January 28, 2025 | CNBC TV

• The housing market hasn't been this slow in almost 30 years
  U.S. home sales haven't been this low in decades, according to data released Friday by the National Association of Realtors. The NAR's measure of existing-home sales, which includes single-family homes as well as condos and townhouses, fell to 4.06 million in 2024. That is the fewest sold since 1995, the NAR said. Experts said the slowdown reflects that mortgage rates have stayed relatively high and housing inventory remains limited, which keeps home prices up. The median home price reached a record high of $407,500 in 2024, according to the NAR. "You had a perfect storm of everything coming together to undermine affordability," just as millennials entered their prime age for buying homes, KPMG chief economist Diane Swonk said.
  January 24, 2025 | The Washington Post
  
• It isn't your imagination: Everyone was on vacation in December
  Economists say the spike in vacations is the result of several post-pandemic shifts. States like Illinois, Nevada and Maine have recently begun mandating paid leave for all workers. Fewer people are quitting or switching jobs than they were a year or two ago, which means burn out is high. "People are frozen in place because there isn't as much churn in the job market. If you're stuck where you are, you want to use the vacation time that you have," said Diane Swonk, chief economist at KPMG. "Still, what's stunning is that we had the strongest December travel season, ever, before we even got to the holidays. The pick up in December vacations underscores a long-standing gap between the country's highest-paid workers, who are most likely to receive paid leave, and lower-paid workers that lack those benefits. The travel bug is still with us but if you're on the outside looking in, you're frozen out," said Swonk of KPMG. "Not everyone has time off, and even if they do, basics like food and shelter are not as affordable as they used to be."
  January 19, 2025 | The Washington Post

• Why KPMG’s Diane Swonk can’t make a ‘strong case’ for two rate cuts this year
  Diane Swonk, chief economist at KPMG, and CNBC’s Steve Liesman join ‘The Exchange’ to discuss the stronger-than-expected December jobs report, the Fed’s next move, and more.
  January 10, 2025 | CNBC TV