The vast majority of economists, that are currently forecasting an imminent US rate hike, got smoked Friday night on two fronts.
The first was the oil price which is tumbling and clearly headed to $50 and probably a retest of lows in the $48s which very possibly won’t hold, either. This alone would delay the Fed six months or so as energy deflation gallops through the CPI.
Worse, the great hawkish hopes of US wage increases was flattened by its Employment Cost Index which rose at the slowest pace in history in Q2 registering just 0.2%, from Bloomie (chart from ZH):
Fed officials are “still looking at a lot of slack remaining in the job market,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report.“If the numbers sort of fall back a bit, that might push the Fed toward a later rate increase than September.”
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
Fed officials are “still looking at a lot of slack remaining in the job market,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report.“If the numbers sort of fall back a bit, that might push the Fed toward a later rate increase than September.”
