• Seth Golden posted an update 5 years, 3 months ago

    After first rate cut in expansion conditions:
    a) Real GDP change around rate cuts in expansions (since 1990):
    Quarter before rate cut: 2.6%
    Quarter of rate cut: 2.4%
    Quarter after rate cut: 2.9%

    The data is similar back to 1971:

    Quarter before rate cut: 2.4%
    Quarter of rate cut: 2.7%
    Quarter after rate cut: 3%

    • Good morning, Seth. Thanks for this historical information. Do you know how many times rates were cut when unemployment was at all time low, major stock indexes at all time high, consumer spending high, etc. do you think this may be the aberration outlier?
        • Yes, within a few of our research reports we outline some of these historic occasions. in 1995 market was at all time high exactly and they cut rates 25 bps. in 2001 employment all time low and cut rates. Consumer spending is always trending higher during expansion cycles.
        • Good morning, Seth
          Thanks for the historic info. With stock market indices at all time high, unemployment at all time low, consumer spending high, etc., that this could be the aberration outlier? In the past, rate cuts were executed when we were at the other end of the spectrum, yes?
            • I think you might be referring to the most recent times we’ve cut ie. 2001 and 2007, which were both during recessions, not during expansions.

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