LAST WEEK

News & Commentary Weekly Highlights:

• Wall Street Journal: Janet Yellen Signals Caution on Rates (Thursday)
• Investor’s Business Daily: 70% of Obama’s Budget Is Writing Checks to Individuals (Wednesday)
• Wall Street Journal: The High Consequences of Low Interest Rates (Wednesday)
• Market Watch: More Americans Quit Their Jobs in December Than at Any Time in Nine Years (Tuesday)
• Market Watch: Why Consumers May Keep Economy from Sinking (Tuesday)

Top Economic Indicator Highlights:

Labor Market Conditions Index (January)

• Index Points: 0.4
• Noteworthy: The labor market conditions index (LMCI) is a creation of the Federal Reserve Board to assess changes across the labor market, derived from 19 labor market indicators, including indicators of unemployment, underemployment, workweeks, wages, job vacancies, hiring, layoffs, quits, and consumer and business surveys. In January, the Fed’s labor market conditions index slowed to the lowest reading since last March.

THIS WEEK

Upcoming Economic Reports & Releases:

Major Indicators

• Housing Starts and Building Permits (8:30am, Wednesday)
• Producer Price Index for Final Demand (8:30am, Wednesday)
• Industrial Production (9:15am, Wednesday)
• Consumer Price Index (8:30am, Friday)
• Real Earnings (9:30am, Friday)

Chart of the Week:

The President’s recently released 2017 budget includes a section on the long-term budget outlook. Demonstrating the uncertainties over the 75-year forecast horizon, the chart above shows the worst-case scenario identified by the Office of Management and Budget (OMB), “assuming a combination of slower productivity growth and higher health care cost growth results in a debt explosion, with debt-to-GDP reaching over 500 percent by the end of the window.” Alternatively, OMB also projects that continuation of current policies will ultimately result in a decline in debt, and a more optimistic projection of high productivity growth and slower health care cost growth assumes debt will be paid off by 2069. While this does help to highlight known budget challenges, projections typically do not build in the effects of crises, which can also dramatically alter spending paths.