U.S. economic data have been more disappointing than at any time in six years. That hasn’t shaken a plurality of economists who still see the Federal Reserve cranking up their benchmark interest rate in June, for the first time since 2006.
Thirty economists project the central bankers, who start a two-day meeting Tuesday, will pull the trigger at their June 16-17 gathering, according to a Bloomberg survey completed March 12 that yielded 66 responses. Another 20 said the Fed will embark on rate rises in September.
Meanwhile, everything other than monthly job gains seems to be in the pits. Wage growth throttled back in February after showing a spark, U.S. factories felt the pinch from a stronger dollar. And credit-card use hit a 14-month low in January, to name just a few.
Since the Bloomberg survey was completed, we’ve also seen disappointing readings in February retail sales, March consumer sentiment and the Fed’s industrial production report for last month. It doesn’t add up to the “solid pace” of expansion that Fed officials saw in their first meeting of the year.
Wells Fargo Securities LLC economist Anika Khan, for one, isn’t getting jittery about the bank’s June forecast — yet.
“This is still a very data-dependent Fed, and the data that are coming in on the negative side are low because of transitory issues — be it weather or the oil price drop,” Charlotte, North Carolina-based Khan said in a phone interview Monday. “If we start to see a consistent string of data that aren’t positive and don’t support our outlook, we of course change as the data change.”
For the economists at TD Securities LLC, it’s all about that low inflation. The Fed’s preferred price-growth gauge has been below the 2 percent goal for 33 months, and the bank sees inflation bottoming out just a month before the June FOMC meeting.