Issue link: http://palletcentral.uberflip.com/i/1141207
The index in April was about 1% below year ago levels. The slowdown is a disturbing and does indicate weaker growth than the GDP number suggests. Industrial Production Labor markets remain extremely tight. Unemployment hit 3.6% in the latest report, which is the lowest unemployment rate in 50 years. Wage pressures reflect the tight labor markets. Average hourly earnings are now rising well above 3%. Some regions and professions are experiencing even bigger wage increases. Tight labor markets also create another challenge for a business: retaining employees. Wage Rates Even so, the overall inflation rate remains moderate near 2%. This is near or below the Federal Reserve (Fed) target. The good news on inflation, combined with concerns about a slowing economy, led the Fed to announce there would not be another rate hike this year. The Interest Rate Signal: Inverted Yield Curve is Flashing Yellow The Wall Street Journal routinely has an article about the interest rate spread and the link to recessions. So, what is the interest rate spread that you should worry about? The spread to track is the gap between a short-term interest rate (3-month Treasury Bill) and a long-term interest rate (a government bond that matures in 10 years). Since holding a long-term bond has more capital risk (value of the bond drops when interest rates go up), a long-term bond generally has a higher yield than a short-term security— over time the gap is usually 1-2%. Interest Rates The interest rate spread becomes larger when the economy dives into recession, such as in 2009. The Fed will aggressively cut short rates to help boost the economy. Long-term interest rates are not controlled by the Fed and usually take longer to move palletcentral.com PalletCentral • May-June 2019 19 60" up to 96" wide capacity DISMANTLE MORE PALLETS PER BLADE. © 2019 Wood-Mizer LLC PERIOD. Call or email Brad Kirkaldy for more information today! 765.228.6775 bkirkaldy@woodmizer.com FRONT or REAR Board Catch 19HP Gas Engine CENTER or REAR Drop Table NEW! OPTIONS PALLET HAWG ® PALLET DISMANTLING BANDSAW NEW! Optional Trailer Package