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3 in 10 Americans Withdrew Money From Retirement Savings Amid the Coronavirus Pandemic – and the Majority Spent It On Groceries

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As the coronavirus pandemic continues to pummel the economy, many Americans are not only decreasing their retirement contributions, but some are raiding their retirement accounts to pay for essentials. A new survey by MagnifyMoney found that 3 in 10 Americans have dipped into the funds meant to be reserved for their golden years — and the majority of those who have done so spent their nest egg on groceries.

Key findings

  • The survey found that 47% of savers have either stopped or lowered their retirement savings contributions amid the coronavirus pandemic. Specifically, 21% have reduced their contributions, while 26% have stopped saving altogether.
  • Of those with a retirement savings account, 3 in 10 have withdrawn funds from their account within the last two months. Another 19% said that they plan on doing so but haven’t yet. On average, those who withdrew funds took out $6,757.20.
    • There are generational differences in who is making withdrawals: 40% of Gen Xers took money from retirement versus 37% of millennials. Only 7% of baby boomers have taken money from their nest egg.
    • Of those with six-figure incomes and above, 37% have taken money from retirement funds.
  • More than half of those who took out retirement money did so to cover necessary expenses like groceries or housing payments and bills, and 1 in 4 wanted to take advantage of legislation allowing penalty-free withdrawals.
  • Of those obligated to take required minimum distributions (RMDs), 56% plan to skip that in 2020 as allowed for by the Coronavirus Aid, Relief and Economic Security (CARES) Act. That’s mostly true for millennials and Gen Xers, who are likely beneficiaries who have inherited a retirement plan. Far fewer baby boomers and members of the silent generation plan to forego their RMD.
  • Retirement accounts aren’t all that’s getting raided: Nearly a third of Americans have withdrawn funds from an investment account other than retirement savings over the last 60 days.

Savers are decreasing their retirement contributions

The COVID-19 pandemic has caused severe economic fallout, from record-breaking unemployment levels to a turbulent stock market. As a result, our survey found that many Americans are either decreasing their retirement contributions — or pressing pause altogether.

Overall, we found that nearly half of Americans have made major changes to their retirement contributions, including 21% who have lowered the amount they are contributing and 26% who have totally stopped making contributions. Notably, one of the generations most likely to pause their retirement contributions was actually the age group closest to their golden years — baby boomers — with 53% stopping their contributions.

Meanwhile, 17% of millennials have paused their retirement contributions, followed by just 10% of those in Gen Z. The sheer number of Americans who are dialing back on what should be a main financial priority underscores the dire financial state that many people currently find themselves in, as the economy continues to grapple with the havoc caused by COVID-19.

People are raiding their retirement accounts to pay for essentials

While the high rate of savers who are pausing their retirement contributions is certainly a cause for concern, what is even more staggering is the number of Americans who are raiding their retirement accounts and withdrawing funds well before their golden years.

Our survey found that within the last 60 days, 30% of Americans have taken money from their retirement accounts due to coronavirus-related circumstances. The average amount being withdrawn is $6,757.20. An additional 19% haven’t withdrawn funds yet, but have plans to.

Part of the reason that so many Americans are making early withdrawals may be due in part to a provision offered by the coronavirus relief bill, that waives the early withdrawal penalty for coronavirus-related withdrawals up to $100,000 from qualified retirement plans and IRAs. In fact, our survey found that 24% of people who withdrew funds early did so to take advantage of that legislation.

However, these were the most-cited reasons for raiding retirement accounts:

  • Covering expenses (52%)
  • A job loss (26%)
  • Concerns over losing money in the stock market (15%)

The fact that the majority of respondents were withdrawing funds to cover essential expenses highlights a disheartening reality. Our survey revealed that 60% of respondents used their golden-year funds to pay for groceries, 42% spent it on household bills, 31% used it for rent or mortgage payments and 27% used it for debt payments. Another 20% haven’t spent the funds yet.

We found that 60% of those who have withdrawn money from their retirement accounts regret their decision to do so. Notably, 77% plan to pay back those funds.

How the coronavirus is impacting retirement savings

The coronavirus aid bill impacts qualified retirement plans and IRAs in several different ways, but it essentially makes it easier and less expensive for Americans to access their nest egg funds during this time of economic uncertainty. The results of our survey indeed found that many Americans are taking advantage of these allowances, and are citing legitimate reasons — like paying for essentials — for taking such actions.

One of the changes made by the coronavirus relief bill is concerning RMDs, which is the minimum amount you are required to withdraw from your retirement account each year. RMDs typically apply to savers who reach a certain age or beneficiaries that inherit an IRA.

However, the CARES Act has waived RMDs for 2020, and our survey found that many Americans plan to take advantage. Of survey respondents who are required to take a RMD in 2020, 56% are planning to skip it this year. While our survey found that many savers are withdrawing their retirement funds early out of necessity, this finding suggests that there are still savers who do not want to cash out on investments that have sunk significantly in value due to the COVID-19 crisis.

Managing your retirement plan during such turbulent times might not feel like a financial priority, especially if you’re facing unemployment, furlough or a growing pile of unpaid bills. However, if you do have to dip into your nest egg, it’s important that you take an informed and measured approach. Read up on how to navigate your retirement plan during the coronavirus pandemic.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,239 Americans with a retirement savings account. The sample base was proportioned to represent the overall population, and the survey was fielded April 28-May 1, 2020.

We defined generations as the following ages in 2020:

  • Millennials are ages 24 to 39.
  • Gen X are ages 40 to 54.
  • Baby boomers are ages 55 to 74.

Members of Gen Z (ages 18 to 23) and the silent generation (ages 75 and older) were also surveyed, and their responses were factored into the overall percentages. However, we excluded them from the generational breakdowns due to the low sample size among both of these age groups.

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2020 Fed Meeting — Fed Continues Emergency Measures and Urges Direct Fiscal Support

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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The Federal Reserve continues to use all the tools in its arsenal to support the U.S. economy against the major downside risks posed by the COVID-19 pandemic. In a series of emergency meetings in March, the Federal Open Market Committee (FOMC) cut the federal funds rate to the zero bound and restarted the quantitative easing (QE) program, among other measures.

The Fed will continue to lean heavily on emergency measures, and also keep forging new tools to address this crisis. COVID-19 has already disrupted economic activity both in the U.S. and around the globe, and with the U.S. economy’s 11-year expansion all but halted, prior 2020 interest rate and economic forecasts are facing extreme uncertainty. Read on for our coverage of what’s happening with the Fed.

Our June 2020 Fed meeting predictions

The Fed should release their regularly scheduled Summary of Economic Projections (SEP). The Fed decided to forgo creating a SEP back in March, in light of the immense economic uncertainty. However, at that meeting’s press conference, FOMC Chair Jerome Powell indicated that the Fed should be back on track in June.

The SEP details the FOMC’s forecast for the economy for metrics like gross domestic product (GDP), inflation, unemployment and the federal funds rate. It gives us an idea of where the Fed sees the economy going in the near and long-term future. This kind of report could provide invaluable insight during this unclear time.

The Fed will most likely leave the federal funds rate unchanged. Since we are not yet out of the pandemic, and the economic outlook is still largely uncertain, it is unlikely the Fed will move to raise rates any time soon.

The federal funds rate range is at 0% to 0.25%, standing at what’s known as the zero bound. It has remained there since March 15 at the FOMC’s first emergency meeting.

The Fed keeps rates low in order to help boost the economy, by making money more easily accessible through loans. A low federal funds rate means banks and other lending institutions also lower their rates. This in turn may make it easier for individuals to pay back a loan, thus making them more likely to borrow money, which they will then spend and put back into the economy.

What Happened at the April 2020 Fed Meeting

The FOMC left the federal funds rate unchanged at its April meeting. The federal funds rate range still stands at 0% to 0.25%, and will remain so for the foreseeable future.

“The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the committee said in its statement. Keeping the rate at the zero bound in times of crisis raises asset prices and makes it easier to access money through lower loan rates, which consumers can then take advantage of to put money back into the economy.

The committee recognized that the coronavirus outbreak is causing “tremendous human and economic hardship” around the world, resulting in “sharp declines in economic activity and a surge in job losses,” as well as oil price drops and lower inflation. The outbreak will continue to “weigh heavily on economic activity, employment and inflation” in the short term and poses “considerable risks to the economic outlook over the medium term,” or in the next year or so — all in all, not the brightest outlook from the Fed.

The Fed did not announce any new emergency measures at its April meeting, but will continue using the tools it previously launched. Namely, the Fed will continue purchasing Treasury securities and agency residential and commercial mortgage-backed securities as needed to help foster smooth market functioning. These purchases have already helped market conditions “improve substantially in recent weeks,” prompting the Fed to slow its purchase pace, although continuing them nonetheless. The Open Market Desk will also continue to offer overnight and term repurchase agreement operations.

At the April meeting, FOMC Chair Jerome Powell reiterated the limits of the Fed’s tools and called for additional fiscal support. In his opening statement, Powell stressed that the Fed’s tools are “lending powers, and not spending powers,” and that the Fed can only operate under the authority granted by government policies. The Fed cannot issue grants, and can only lend to solvent businesses that are reasonably expected to repay the loans.

He recognized that unfortunately, this leaves out many potential beneficiaries. “[F]or many others, getting a loan that may be difficult to repay may not be the answer,” Powell said. “In these cases, direct fiscal support may be needed.” Deviating some from his typical avoidance of commenting on fiscal policy, he continued, “Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources.”

Essentially, the Fed can only do so much with the tools Congress has given it — the responsibility of helping the economy’s most vulnerable players directly falls to Congress. “This direct support can make a critical difference, not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy,” Powell concluded. As for what that direct support should look like, Powell noted that policies that protect businesses from avoidable insolvency so they can hold onto their employees or rehire them would help reduce damage to the economy over the long run.

Powell also emphasized that now “is not the time” to worry about the federal deficit or to act on those concerns. Rather, it is the time to use the “great fiscal power of the U.S.” to actually help the American people and “try to get through this with as little damage to the longer run productive capacity of the economy.”

Upcoming Fed meeting dates in 2020:

Here is the FOMC’s calendar of scheduled meetings for 2020. Each entry is tentative until confirmed at the meeting proceeding it. For past meetings, check the next section to catch up on our pre-game forecasts and after-action reports for what happened in 2019.

What happened at the March 23rd Emergency Fed Meeting

The FOMC gathered on Monday for a third emergency meeting amid the coronavirus outbreak to add to and amend its emergency measures. Per the committee’s statement, they are now moving toward “aggressive efforts” to continue battling what will certainly be “severe disruptions” to the U.S. economy due to the coronavirus pandemic.

The Fed has now committed to purchasing Treasury securities and agency mortgage-backed securities (MBS) “in the amounts needed” — a change from its previous purchase goal of at least $500 billion of Treasury securities and $200 billion of MBS. Purchases of agency commercial MBS are also included moving forward. These purchases are meant to refuel market liquidity and aid market functioning, which have been hampered by the effects of COVID-19. Now without any cap, the Fed is prepared to aid these markets as much as possible to stimulate the economy.

The Fed is also launching three new loan facilities designed to provide up to $300 billion in new financing and the Department of the Treasury, through the Exchange Stabilization Fund (ESF), will absorb up to $30 billion in losses for these facilities.

The Primary Market Corporate Credit Facility (PMCCF) will support new bond and loan issuance, and the Secondary Market Corporate Credit Facility (SMCCF) will provide liquidity for outstanding corporate bonds. Both facilities are meant to provide credit to large employers. The third facility is the Term Asset-Backed Securities Loan Facility (TALF), a tool previously used in the 2008 crisis, that is designed to support the flow of credit to consumers and businesses. The TALF enables the issuance of asset-backed securities, like those backed by student loans, auto loans and credit card loans.

To facilitate the flow of credit to municipalities, the Fed will also expand the Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities and the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities to more than just banks. The Fed also decreased the pricing of the CPFF.

What happened at the March 15th Emergency Fed Meeting

In light of the current events, the emergency FOMC meeting on March 15 has replaced the committee’s previously scheduled meeting for March 17 and 18.

On March 15, the FOMC cut the federal funds rate by a full percentage point and launched a package of emergency measures the likes of which have not been seen since the financial crisis. The federal funds rate range now stands at 0% to 0.25%, putting it effectively at what’s known as the zero bound. This cut follows the Fed’s surprise rate cut on March 3, the first step in its emergency response to the coronavirus.

The Fed expects to keep rates at this level until they are “confident that the economy has weathered recent events” and is back on track to reach the Fed’s goals of price stability and maximum employment. Fed Chair Jerome Powell has said the FOMC will not look into negative interest rates as a response to the current crisis.

A main concern and main indicator of the times has been the stock market. The Fed’s emergency actions come at a time of immense turbulence in the stock market. The S&P 500 had dropped nearly 30% in the three weeks preceding the meeting, indicating evaporating investor confidence in the economic outlook and the government’s response to the outbreak. Massive sell-offs have even triggered several circuit-breakers, or pauses in open trading hours, to prevent a complete crash.

Note that all but one FOMC member voted in favor of this rate cut. Cleveland Federal Reserve President Loretta Mester would have preferred to cut the federal funds rate range to 0.50% to 0.75% at the meeting, but still supported all other actions taken by the Committee.

In a move equally if not more important as the rate cut, the FOMC relaunched quantitative easing to address the spreading economic crisis. The Fed announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of agency mortgage-backed securities (MBS) over the coming months. These purchases are designed to help restore smooth market functioning by increasing market liquidity, which has become strained in recent weeks. In turn, this is meant to create more accommodative financial conditions and support the rest of the economy. It is unclear how long exactly these actions will last, as Fed Chair Powell indicates it all depends on the path of the coronavirus and its effects.

The Fed also reduced the interest rate on discount window loans to 0.25% and will offer discount window loans for periods up to 90 days. The Fed also encourages banks to use the discount window to help provide credit to households and businesses.

Other actions the Fed took include reducing the pricing on dollar swap lines — in coordination with other countries’ central banks — which Powell assures carries “no risk to the Federal Reserve or to the American taxpayer,” eliminating reserve requirements for banks and encouraging banks to use intraday credit, their capital and liquidity buffers.

What about the economic outlook? Powell and the FOMC stress that the “economy came into this challenging period on a strong footing.” Unemployment was at 50-year lows, and both job gains and wage growth have been running at a solid pace. “U.S. banks are strong, have high levels of capital and liquidity and are well positioned to provide credit to households and businesses,” assured Powell in the FOMC’s March 15 statement.

Given the rescheduling of the routine March Fed meeting and the volatility of the current state of affairs, the FOMC will not release a Summary of Economic Projections (SEP) this month.

“A number of FOMC participants had already reached out to make the point that the economic outlook is evolving on a daily basis and it is depending heavily on the spread of the virus and the measures taken to affect it and how long that goes on,” Powell shared, adding that releasing an SEP in our current circumstance didn’t seem to be useful. “In fact, it could have been more of an obstacle to clear communication than a help.”

Powell expects the Fed to be back on their regular quarterly cycle again in June.

As for the outlook, the FOMC’s insight can only stretch so far. It is broadly expected that the second quarter will be a weak quarter, since output is declining and businesses are shuttering in major cities. But looking past the second quarter, it becomes harder to predict, as our economy is largely in the hands of the coronavirus and the path it takes.

Fed March 3rd, 2020 Emergency Rate Cut

In a surprise move on March 3, the FOMC cut the federal funds rate by half a percentage point, just two weeks before its regularly-scheduled March meeting. The federal funds rate range now stands at 1.00% to 1.25%.

The Fed’s emergency action follows a rocky period for the stock market. The S&P 500 dropped more than 11% in the final week of February, putting it briefly into correction, with stocks driven lower by burgeoning concerns about coronavirus and its impact on the global economy.

Markets rallied on the first trading day of March, on news that the global economic powers were discussing measures to blunt the coronavirus’s economic impact. The same morning the Fed took action, the G-7 released a statement noting that it would also take action to help the global economy meet the threat of coronavirus.

The Fed itself characterized the rate cut as directly related to the rapidly-spreading virus. “The fundamentals of the U.S. economy remain strong,” read the FOMC statement. “However, the coronavirus poses evolving risks to economic activity.”

The FOMC said it would continue to closely monitor the effects of the coronavirus, both domestically and internationally, and “act as appropriate to support the [U.S.] economy.” Typically, this language can indicate more rate actions should conditions not improve.

In a press conference on the morning of the emergency cut, Fed Chair Jerome Powell reiterated that the U.S. economy is strong, while also warning that coronavirus posed material risks to the economic outlook. “We saw a risk to the outlook for the economy and chose to act,” he said.

What happened at the January 2020 Fed meeting

The Federal Open Market Committee left the federal funds rate untouched. The target range for the federal funds rate remains at 1.50% to 1.75%. The committee’s decision was unanimous. Fed Chair Jerome Powell has repeatedly stated that the FOMC would need to see a material change in the economy to knock rates higher or lower. There has been no such material change, making the absence of a rate change wholly unsurprising.

The U.S. economy continues to grow at a moderate pace — although we’re not totally in the clear.
On its own, the U.S. economy is performing well as we enter the 11th year of economic expansion, the longest on record. Among other blessings, the Fed can point to a strong labor market, solid job gains, low unemployment and moderate household spending as markers of domestic economic stability. On the other hand, business fixed investment and exports remain weak, black marks on the economy’s near-perfect report card.

But the big risks to the economic outlook come from the rest of the global economy. Most notably, the coronavirus has become an economic cause for concern, one that Powell identified early on in his post-meeting press conference statement as one of a few uncertainties.

“The situation is really in its early stages,” Powell commented. “It’s very uncertain about how far it will spread, and what the macroeconomic effects will be in China and its immediate trading partners,” most notably the U.S. It is likely we’ll see some more disruption to activity in China and possibly globally; travel restrictions and business closures are already being imposed.

Other uncertainties cited by Powell include sluggish growth abroad and rocky trade negotiations, both of which weigh down manufacturing and business fixed investment and exports. However, trade risks have certainly calmed down, and there are some signs that global growth may be stabilizing.

Inflation remains a point of concern, as it has consistently remained below the Fed’s 2% target. Part of the Fed’s mandate to maintain price stability includes keeping inflation symmetrically around 2%. But for a 12-month period ending in November 2019, overall inflation has been running below 2%. At the press conference, Powell made it clear that the committee was not comfortable with inflation running persistently below their objective, “particularly at a time such as now where we’re a long way into an expansion, and a long way into a period of very low unemployment.”

Powell admitted that persistently low inflation can lead to larger ramifications, such as lower interest rates and less wiggle room to change the federal funds rate in the event of a downturn. “We have seen this dynamic play out in other economies around the world,” he said, “and we’re determined to avoid it here in the United States,” by continuing to adjust monetary policy as appropriate.

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Learn more: What is the Federal Open Market Committee?

The FOMC is one of two monetary policy-controlling bodies within the Federal Reserve. While the Fed’s Board of Governors oversees the discount rate and reserve requirements, the FOMC is responsible for open market operations, which are defined as the purchase and sale of securities by a central bank.

Most importantly, the committee controls the federal funds rate, which is the interest rate at which banks and credit unions can lend reserve balances to other banks and credit unions.

The committee has eight scheduled meetings each year, during which its members assess the current economic environment and make decisions about national monetary policy — including whether it will institute new rate hikes.

A look back at 2019

We’ve come a long way since December 2018, when the Fed delivered its fourth rate increase of that year, and the ninth in its campaign of rate hikes that began way back in December 2015. We saw a couple more rate increases in the first half of 2019 — the December 2018 SEP had projected a 2.9% federal funds rate projection for 2019. Obviously, that forecast did not age well.

Experts and markets alike were already wary of the December 2018 rate increase, convinced that a recession was just around the corner. Luckily, we’ve managed to avoid a recession, thanks in part to the Fed’s monetary policy moves, which have remained rather accommodating throughout the year.

That December 2018 hike would be the last one before a six-month monetary policy pause, ended by a historic 25-bps rate cut at July’s FOMC meeting. It was the first Fed policy easing since the depths of the Great Recession, more than a decade ago.

Fed Chair Powell acknowledged the ups and downs we’ve been through over the course of the past year. “Our views about the path of interest rates… changed significantly, as the economy faced some important challenges,” surprising challenges that he didn’t see coming, Powell said, citing weaker global growth and trade developments as those main hurdles. However, he is pleased that the Committee moved to support the economy throughout these challenges. “I think our moves will prove appropriate,” he said.

 

What happened at the December 2019 Fed meeting

As expected, the Fed left the federal funds rate untouched. The Federal Open Market Committee (FOMC) kept the federal funds target range at 1.50% to 1.75%. Notably, all voting members agreed with this direction, lending a definitive stance to the decision.

So it looks like we’re entering another rate pause period, as economic developments at home and abroad have not given the Fed any reasons for a “material reassessment” of its outlook. Recall the comments that Fed Chair Jerome Powell made at the October meeting, when he said the Committee would only change the direction of monetary policy if they could see any real reasons to do so in the economic outlook.

Overall, the Fed’s outlook for the U.S. economy remains positive, pointing to a strong labor market, solid job gains, low unemployment rate and solid consumer confidence. Despite continuing softness in exports and manufacturing and business fixed investment, the economy continues to grow at a moderate rate.

There were no surprises in the SEP, and few revisions to the projections released in September. The SEP forecasts for real GDP and personal consumption expenditure (PCE) inflation remained unchanged for the next three years. Notably, the Core PCE inflation projection was revised lower only slightly for 2019. Unemployment rate expectations are also down through the longer run, which aligns with the continued strength of the labor market.

The SEP downgraded its federal funds rate projection. By this forecast, we shouldn’t expect a rate hike until 2021. But, if 2019 has taught us anything, it’s that the tides of monetary policy can change very rapidly, altering both our economic expectations and our economic reality.

Speaking of fed funds rate projections, we got a new Fed dot plot. The Fed dot plot anonymously demonstrates each individual FOMC member’s own projection for the federal funds rate, shown as the midpoint of the target range or target level for the federal funds rate.

As it’s the end of the year, all members indicated a midpoint dot just above 1.5% for 2019. Most members chose to keep their dot there for 2020, with only four indicating a midpoint range just below 2%. Things start to look up in 2021, when eight members foresee a federal funds rate between 2% and 2.5%, while the other nine kept their dots below 2%. The outlook only continues to climb after that.

Our October Fed meeting predictions

There’s a chance the Fed will cut the federal funds rate again. The federal funds rate currently stands at 1.75% to 2.00%. If the Fed cuts rates in October, it will be the third cut in as many meetings. The two recent cuts — in July and September — were characterized by the Fed as protective measures, guarding against downside risks to the otherwise strong economy. These risks included constant global trade uncertainty and its byproduct, manufacturing decline.

Unfortunately, global trade negotiations remain rocky and manufacturing continues to display weak growth numbers. In September, U.S. manufacturing activity fell to a 10-year low, according to the Institute for Supply Management. In order to further support the economy, the Fed may have to execute another rate cut, many experts argue.

We should hear more about the state of the economy and the chance of recession. Talk of recession has hung over the economy since last December, although never truly manifesting as a real threat. Market watchers pointed to an inverted Treasury yield curve as a sure sign of recession, as an inversion has historically preceded a recession. However, the data supported the opposite: strong job growth, historically low unemployment rates and wage growth. In any case, the yield curve recently un-inverted.

The U.S. economy is in its 11th year of expansion, which the Fed seeks to support and maintain with its monetary policy choices. So keep an eye out for the Fed’s latest outlook.

What happened at the October Fed meeting

The FOMC has cut the federal funds rate at its third consecutive meeting. After cutting interest rates in July and September, the Federal Open Market Committee (FOMC) has lowered the federal funds rate range by 25 basis points to 1.50% to 1.75%. As with the previous two reductions, the committee says this easing is meant to provide “significant support” to the U.S. economy against downside risks. These include muted inflation pressures, the ongoing trade battle with China, slower global growth and weaker U.S. manufacturing due to global uncertainties.

Does this mean the Fed will continue to cut rates? Fed Chair Jerome Powell is always quick to state that the Fed’s decisions are driven by the economy’s performance, noting at the post-meeting press conference that “policy is not on a preset course.” He said the economy’s current growth rate and continuing resiliency would not indicate another necessary rate cut. Of course, he also stressed that any changes to this state of affairs could prompt the Fed to ”materially reassess” its outlook, although he never shares what he thinks those changes might look like.

For what it’s worth, the FOMC again did not deliver a unanimous decision to cut rates. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren voted to maintain the target range at 1.75% to 2.00%.

The downside risks to the U.S. economy remain, but it continues to perform well on its own. The Fed’s October meeting statement began by outlining the state of the economy. On the upside, the statement indicated that the labor market remains strong, the economy is growing at a moderate rate, job gains are solid, unemployment is low and household spending growth is strong. The weaker data points include low inflation, weaker business fixed investments and exports and slower manufacturing.

On the whole, the data continues to point to a growing, stable economy, in its 11th year of expansion. The committee itself said it expects the economy to keep expanding at a moderate rate.

Our September Fed meeting predictions

It certainly looks like the Fed may cut rates again at its September meeting. The 25 basis point (bp) cut in July — the first in over a decade — reduced the federal funds rate to 2.00% to 2.25%, and the Federal Open Market Committee (FOMC) justified its move by saying it wanted to protect against “downside risks,” namely weak global growth and rocky trade policy negotiations. Due to the persistence of these risks in the interim, markets and economic experts are preparing for yet another 25 bps cut later this month, which would put the federal funds rate at 1.75% to 2.00%.

After the July meeting, Fed Chair Jerome Powell stated that he and the FOMC did not see the historic rate reduction as the first in a string of cuts. However, Powell spoke at the University of Zurich on Sept. 6, right before the FOMC’s pre-meeting silent period, and stated that the committee would “continue to act as appropriate” to protect the U.S. economy. The risks cited in July have not abated in September, so many have concluded it’s not too far-out to assume this signals another rate cut.

Economist and Fed-watcher Tim Duy agrees — and he thinks the cuts won’t end in September, either. “The Fed will cut rates 25bp next week and leave the door open for more,” he wrote.

We’ll get a look at the Fed’s newest Summary of Economic Projections this month. Every other Fed meeting brings the release of the Summary of Economic Projections (SEP), which outlines each committee member’s outlook for the U.S. economy over the next couple of years and the longer term. These forecasts include GDP growth, inflation, unemployment and the federal funds rate. The SEP gives us a relative idea of what to expect from the economy in the future.

Relatedly, Powell should once again stress that we’re not on the verge of recession. While speaking in Zurich, Powell assured that the Fed’s “main expectation is not at all that there will be a recession.” He points to the U.S. economy’s continued expansion — “moderate growth, a strong labor market” and inflation, although muted, hovering around the 2% goal. He also reminded us that we’re now in the 11th year of an economic expansion. It is expected that Powell will use the post-meeting press conference, as he has done before, to address and dispel recession concerns.

That said, recession concerns aren’t entirely unfounded. Overall growth has slowed from its speedy pace in 2018, and the latest jobs report showed fewer new jobs in August. Further, the Treasury yield curve — a tool used to look at the future direction of interest rates and broader economic trends — has inverted recently. This phenomenon — where long-term Treasury interest rates fall below short-term Treasury rates — has historically indicated an upcoming recession. A yield curve inversion like this shows that markets are predicting lower rates in the future. However, there’s certainly room for prediction error; the curve inverted once before this year and it was not followed by an immediate recession.

What happened at the September Fed meeting

The Federal Open Market Committee (FOMC) cut the federal funds rate, as expected. Fed funds took another 25 basis point tumble to 1.75% to 2.00%, and the committee once again cited “implications of global developments” and “muted inflation pressures” as the causes.

If you recall, this reduction seems to contradict Fed Chair Jerome Powell’s remarks back in July, when he was emphatic that July’s cut — the first in over a decade — was not the opening shot in a campaign of many reductions. Rather, he referred to it more as a “mid-cycle adjustment” and a protective response due to a few “downside risks” (weak global growth and trade uncertainties) to the otherwise strong economy.

As with the July meeting, there were dissenters on the committee. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren, who had both voted against the July rate change, preferred to maintain the 2.00% to 2.25% range. St. Louis Fed President James Bullard also voted against the decision, although he really wanted a bigger, 50 basis point cut.

Chair Powell and the Fed’s Summary of Economic Projections (SEP) indicate a continued positive outlook for the U.S. economy. The Fed continues to acknowledge that the U.S. economy itself is still doing just fine; as Powell stated at today’s press conference, “we continue to see sustained expansion.”

“This has been our outlook for quite some time,” he added, despite significant changes in their views on the appropriate path of interest rates.

More specifically, the FOMC’s statement points to the continued strength of the labor market, moderate growth in economic activity, solid job gains, a low unemployment rate and strong household spending growth. The only downside seems to be weakened business fixed investment and exports — both of which can be explained by the ongoing trade conflict.

The SEP indicates that committee members now predict an infinitesimal increase in both the real GDP and the unemployment rate for 2019. The personal consumption expenditure (PCE) and Core PCE inflation projections remain unchanged from the June SEP — so inflation continues to be a non-event. Their future predictions for 2020 to 2022 and the longer run also remain relatively unchanged.

The Fed dot plot — which anonymously indicates each member’s federal funds rate prediction — shows a much lower and more cohesive outlook for 2019 when compared to June’s SEP. Undoubtedly as a result of rate cut double header, there are more low-rate predictions through 2022. The majority indicate a federal funds rate below 2% for this year and next year.

So how about that recession? The past few months have been clouded by a certain cognitive dissonance: The Fed’s positive economic outlook on one hand, and the public’s seeming obsession with an imminent recession on the other. If you were to look at just the data, you’d see an economy performing well. Of course, there’s more to it than that, as risks keep emerging and causing softness here and there.

Still, the “most likely case is continued moderate growth,” a widely shared projection among forecasters, according to Powell. And the reason for the continued positive outlook, Powell added, is the committee’s dedication to its mandates: “Our shifting to a more accommodative stance over the course of the year has been one of the reasons why the outlook has remained favorable.”

As for continued worries about the inverted treasury yield curve, Powell admitted that while the Fed certainly monitors the yield curve carefully, “there’s no one thing” that you can point to that undoubtedly means recession. Rather, Powell suggested, the inverted curve may be a result of the very risks the rate cut is intended to protect against.

“We don’t see a recession, we’re not forecasting a recession, but we are adjusting monetary policy in a more accommodative direction to try to support what is, in fact, a favorable outlook.”

Our July Fed meeting predictions

Chances of a rate cut at the July meeting are way up. Committee Chair Powell all but confirmed the possibility in his recent testimony before Congress. “Since the June meeting, and even for a period before that, the data have continued to disappoint,” he said. As the Fed relies on jobs, manufacturing and wage data to help inform their policy decisions, disappointing data like what we’ve been seeing, provides a real justification of a rate cut.

However, the cut shouldn’t be anything more than 25 basis points. “The data doesn’t support a 50bp move,” maintains economist Tim Duy. Growth has certainly slowed in 2019, but June’s job reports provided a positive surprise, while wage growth still weakened.

Experts speculate that if the Fed does not cut rates this month, they will signal a rate cut to come in September instead. For one, Boston Federal Reserve President Eric Rosengren has vocalized that he thinks the economy is “quite strong” at the moment and doesn’t quite yet need Fed policy interference. Whether the rest of the FOMC agrees with him or not will be revealed next week.

We’ll hear more about the economy’s future as talk of an impending recession continues. Speculation about an upcoming recession has held steady since December 2018, when the Fed downgraded their economic outlook. Since then, growth has continued to slow, although a few positive surprises along the way have buoyed sentiment.

One recession indicator will be very clear if the Fed actually holds off on a rate cut this month. “Without a rate cut, the markets may consider the odds of a more significant slowdown as increasing,” said Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site. One interpretation of the Fed not cutting rates yet would be a need to maintain an insurance policy against an impending economic slowdown. “Keep your powder dry” is a common saying, and no cut may mean the Fed wants to reserve it’s finite rate cutting policy tools to fight a recession later.

What happened at the July Fed meeting

The Federal Reserve cut the federal funds rate by 25 basis points. After a six-month monetary policy pause, the Federal Open Market Committee (FOMC) has lowered the federal funds rate by 25 basis points to a range of 2.00% to 2.25%, a choice it maintains is “appropriate to sustain the expansion” of the economy.

The FOMC statement cites “implications of global developments” (such as trade conflict and Brexit) and “muted inflation pressures” as its chief reasons for the rate cut, also calling out softer growth in U.S. business fixed investment. On the other hand, the committee acknowledged the still-favorable parts of the U.S. economy, including the strong labor market, low unemployment and increased household spending.

At the press conference, Fed Chair Jerome Powell underscored these good bits, stressing that “nothing in the U.S. economy that present a prominent, near-term threat,” while very pointedly calling out global risks, warning that the implications of these risks weigh heavily on the FOMC’s thinking.

As to whether these points signal more rate cuts, Powell was adamant that they do not. In reference to previous instances where mid-cycle rate cuts have evolved into rate cutting cycles, Powell said that “the Committee is not seeing that,” adding “that’s not our perspective … or outlook.”

The Fed maintained a positive outlook for the U.S. economy. Despite slower growth, the US economy has continued to grow, and Chair Powell made sure to emphasize the point in his press conference. “The Committee still maintains a favorable baseline outlook,” he said, continuing to stress the issue throughout.

Powell begs us not to take the rate cut as a signal of panic at the Fed. If you remember, Boston Federal Reserve President Eric Rosengren spoke on July 19 about his preference to wait to make any rate changes, “given that the economy is quite strong” and with inflation holding around 2%. In fact, Rosengren and Kansas City Fed President Esther L. George were the two dissenters at the July meeting. Both indicated their preference to keep rates unchanged.

At the press conference, Powell doubled down on the rate cut as a safeguard from downside risks. He identified three threats the rate cut would protect against. First, weak global growth, namely in Europe and China. Secondly, weak domestic manufacturing. Third — a byproduct of risks one and two — is stubbornly muted inflation growth.

For some, however, the Fed rate cut is hardly justified, or is merely a fig leaf.

Ahead of the July meeting, University of Oregon economist Tim Duy proclaimed that “the December rate hike was simply a small mistake than needed to be rectified,” and he remained as emphatically critical in its wake. “All policy makers really know at this point is that they are navigating a mid-cycle course correction,” he wrote in Bloomberg.

The Fed’s reassurances of a positive economic outlook suggest a recession remains a distant threat, at best. We’ve seen consistent growth throughout this year, albeit at a slower pace than 2018. Plus, the Fed continues to keep a positive outlook for the U.S. economy. Any threats that are perceived now are the target of today’s rate cut, designed to continue the growth we’ve been seeing.

When asked about how cutting rates today would give the Fed little wiggle room to cut again when a recession hits, Powell was quick to shut down any assumption that one was impending. “In other cycles, the Fed wound up raising rates again after a mid-cycle adjustment,” he countered, quickly adding, however, that “I’m not predicting that.” Still, he leaves it open to the possibility of future rate hikes after this cut, rather than an overall downward turn.

Our June Fed meeting predictions

The Fed could signal a possible future rate cut. Chair Jerome Powell recently indicated the Fed’s willingness to cut rates, if necessary, in response to a bad outcome in trade negotiations, or data pointing to a weakening economy. This was the first time Powell had hinted at the possibility of monetary policy changes since the Fed chose to put an end to its rate hike streak back in January.

Economist Tim Duy points to the May jobs report, especially revisions to the prior months’ data, as another trigger for the Federal Open Market Committee (FOMC) to foreshadow a possible rate cut. Job gains slowed in May, due to softer economic growth rather than a lack of workers. But Duy warns that the revisions indicate U.S. job growth has “slowed markedly” over the last four months, another worrying sign.

Note that there is practically zero chance of a rate cut at the upcoming June meeting. Instead, you should look for hints to a rate cut later in 2019. “I don’t think they’ll change the rate,” says Tendayi Kapfidze, chief economist at LendingTree. “Definitely not at this meeting. I’d be surprised if it happens before September.”

The Fed could soften their economic forecast. The June Fed meeting will bring the latest Summary of Economic Projections (SEP). Much like it sounds, this is where the FOMC updates their long-term forecast for economic performance over the next few years.

Kapfidze predicts we’ll see another downgraded SEP forecast. “I think they’ll come up with a softer forecast. It’s just a question of how soft,” he said. With the data coming in somewhat mixed and trade negotiations remaining highly unpredictable, Kapfidze said the Fed finds itself in a “delicate moment to get the pulse of the state of the economy.”

We should learn more about the Fed’s approach to their 2% inflation goal. At the April/May meeting, we learned that inflation for personal consumption expenditures — the Fed’s preferred measure of price changes — fell unexpectedly. This left many economists and experts concerned that the Fed was neglecting its mandate to keep inflation symmetrically around 2%.

“Perhaps inflation is not coming back as they anticipated,” Kapfidze muses. So while inflation is stable right now, it’s definitely still a concern.

What happened at the June Fed meeting

The Fed kept the federal funds rate steady… for now. The federal funds rate was left at 2.25% to 2.50%, as the Fed continues its rate pause. The Fed changed its tone by dropping its “patient stance” language, saying instead that it would “closely monitor the implications” given the “uncertainties about this outlook,” namely trade developments and global growth concerns.

In simpler terms, the FOMC felt the current data didn’t support a case for cutting rates right now. However, it does expect the economic climate to change in the next few months – possibly for the worse.

“The Committee wanted to see more [before making any changes],” said Fed Chair Jerome Powell at the post-meeting press conference. “I expect a full range of data, and that something will change before the next meeting.” Essentially, as these “uncertainties” become clearer, the Fed will adjust policy accordingly.

The dovish St. Louis Fed President James Bullard was the only dissenter to the policy decision, voting to lower the federal funds rate range by 25 basis points, while all others voted to maintain rates where they are.

A rate cut at the next meeting is by no means an inevitable conclusion. Most experts expected the Fed to signal that a rate cut was imminent. We didn’t get that strong of a sign.

The Fed’s latest Summary of Economic Projections (SEP) predicts no rate changes until 2020, keeping the projection for 2019 within the current range at 2.4%. The 2020 projection, however, dropped to 2.1%, which lies below the current lower limit of the rate range. It’s also well below the previous March projection for 2020 of 2.6%.

Still, Tendayi Kapfidze, chief economist at LendingTree, points to three signs that a rate cut is coming. “For one, at least eight Fed members projected a cut before the end of the year,” he shares. “Two, we saw one member already voting for a cut at this meeting. Three, the Fed removed the word ‘patient’ in their statement, instead calling out the uncertainties and risks.”

As for when the Fed might reduce rates, Kapfidze thinks the next Fed meeting in July is still too soon. “Perhaps September is more realistic.”

The SEP was stronger than expected. The Fed’s economic projections were little changed from its March outlook, again contradicting expert predictions of a softer outlook. Change in real GDP and the federal funds rate projections for 2019 matched the numbers in March, while the unemployment rate projection dropped by a single basis point for 2019.

In its statement, the FOMC points to strong labor market reports, low unemployment, higher household spending and overall moderate economic growth as support for a continued favorable baseline outlook.

That tricky problem with inflation remains. If you recall from last month’s meeting, inflation was the hot topic as the Fed was concerned about inflation continuing to fall short of its goal of 2%. This time around, the Fed again acknowledged that overall inflation and inflation for items other than food and energy are running below 2%.

Chair Powell shared that the Committee points to uncertainties in global growth and trade negotiations as factors for muted inflation. Plus, the SEP gives us some additional insight, showing us that the Fed expects inflation to continue to run below target.

Still, Powell reiterated the Committee’s firm commitment to its inflation objective. He also stated that while inflation continues to run below target, the Committee expects it to pick back up thanks to solid growth and a strong job market, although “at a slower pace than had been expected.”

Our April/May Fed meeting predictions

The Fed should reaffirm their patient stance at the April 30/May 1 meeting, and may reiterate their view that stronger U.S. economic data is needed before they can make more policy changes. The Fed already said as much in its March meeting minutes, where it confirmed that “a majority of participants” agreed to leave “the target range unchanged for the remainder of the year,” due to the unsettled economic outlook. When considering rate changes, the Fed looks at job growth, wages, and inflation pressures; if the numbers meet the Fed’s parameters, rates stay unchanged, but if they are too hot or too cold, rates need to change. Inflation has been hovering around the Fed’s target of about 2%, and while both job growth and retail sales were points of concern due to low numbers since December, both measures have recovered somewhat in March economic data reports.

Without drastic changes to the data, there is little risk the Fed will be moving rates up (or down). As economist Tim Duy succinctly told MagnifyMoney, “We will not see a rate cut. I don’t think we will see much change in policy at all. It should be a boring meeting.”

About that economic outlook! Even if the Fed stays on pause, it seems like the latest data should tamp down talk of an upcoming recession. We’ve been hearing analysts and commentators talk about a possible recession since December, when the data showed a decline in economic indicators across the board. The cynicism really started to kick in when the Treasury yield curve began to invert, which can be (but isn’t always) a harbinger of recession. However, the stronger March jobs, retail and new home sales reports have lessened such concerns. Plus, the latest GDP report from the Bureau of Economic Analysis shows growth at an annual rate of 3.2% in the first quarter of 2019, exceeding economists’ predictions of 2.5% growth.

Tendayi Kapfidze, lead economist at LendingTree, said as much back in March ahead of that month’s Fed meeting: “Since the financial crisis, data in the first quarter has been coming in weak because of seasonal adjustment. Models that make this adjustment are skewed by this, but then everything can reaccelerate in following quarters.” Plus, on top of that adjustment, the government shutdown greatly affected reports in both their results and how they were measured.

On the whole, we’re still seeing an economy on the rise, not a decline — it’s just not growing quite as fast as it was in 2018.

What happened at the April/May Fed meeting

The Fed maintained their patient policy stance. The Fed left rates unchanged at 2.25% to 2.50%. The latest economic data has indicated some recovery in jobs and retail sales growth, while the unemployment rate remains low, as well. Plus, GDP grew 3.2% in the first quarter, exceeding expert economists’ predictions of 2.5%. This data supports the Fed’s outlook for a growing economy and its decision to keep interest rates unchanged.

What about the Fed’s inflation goal? This was the big question for Fed Chair Jerome Powell at his press conference following the FOMC meeting. Inflation for personal consumption expenditures — the Fed’s preferred measure of price changes — has been dropping for the past three months, with the first quarter coming in at 0.7%, below the committee’s 2% target. Powell did note that inflation “unexpectedly fell,” standing at 1.6% for the previous 12 months ending in March.

When asked about what signs the FOMC might see as a need to take action, Powell first answered, “We are strongly committed to our 2% inflation objective, and to achieving it on a sustained and symmetric basis,” a point he reiterated throughout the conference. “The Committee would be concerned if inflation were running persistently above or below 2%” he continued, also noting that what they are currently seeing does not indicate a persistent problem.

While policy remains on hold for now, economist Tim Duy has indicated that weak inflation numbers should still push the Fed to cut rates before the end of the year — “If the Fed is serious about the inflation target, then the odds favor a rate cut over a rate hike,” he writes. Given Powell’s reassurance of the Fed’s strong commitment to its inflation goal, a rate cut could certainly be in the near future.

Our March Fed meeting predictions

There’s little chance of a rate hike this time around. In a policy speech on March 8, Fed Chair Jerome Powell reinforced the FOMC’s patient approach when considering any changes to the current policy, indicating he saw “nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures.”

This is no different from what we heard back in January, when the Fed took a breather after its December rate hike. There was no change to the federal funds rate at that meeting, and Powell had stressed that the FOMC would be exercising patience throughout 2019, waiting for signs of risk from economic data before making any further policy changes.

Further strengthening the case for rates on hold, the reliably hawkish Boston Fed President Eric Rosengren cited several reasons that “justify a pause in the recent monetary tightening cycle,” in a policy speech on March 5. His big tell was citing the lack of immediate signs of strengthening inflation, which remains around the Fed’s target rate of 2%.

Even though there had been some speculation of a first quarter hike at the March Fed meeting, LendingTree chief economist Tendayi Kapfidze reminds us that the Fed remains, as ever, data-dependent. “The latest data has been on the weaker side, with the exception of wage inflation,” he says.

The economic forecast may be weaker than December’s. The Fed will release their longer-range economic predictions after the March meeting. These projections should include adjustments in the outlook for GDP, unemployment and inflation. The Fed will also provide its forecast for future federal funds rates.

Kapfidze expects we’ll see a weaker forecast this time around than what we saw in December. “I except the GDP forecast to go down, and the federal funds rate expectations to go down.” This follows a December report that posted lower numbers than the September projections.

Despite flagging economic projections, Rosengren offered a steady outlook in his speech. “My view is that the most likely outcome for 2019 is relatively healthy U.S. economic growth,” he said, again attributing this to “inflation very close to Fed policymakers’ 2 percent target and a U.S. labor market that continues to tighten somewhat.”

The Fed’s economic predictions offer clues to its future policy decisions. In September, the Fed projected a 2019 federal funds rate of 3.1%. That number dropped to 2.9% in the December report. With the current rate at 2.25% to 2.5%, there’s still room for more hikes this year. Keep in mind, however, that, the March meeting may narrow projections for the rest of 2019.

As for Kapfidze, he thinks we’ll see a rate hike in the second half of the year. “If wage inflation continues to increase and it trickles more into the economy, the Fed could choose to raise rates due to that risk.”

However, as of March 12, markets see the odds of a rate hike this year at zero, while the odds of a federal funds cut has risen to around 20%, based the Fed Fund futures.

What happened at the March Fed meeting

The Federal Reserve signaled no rate hikes this year, and the possibility of only one increase in 2020. The Fed has pivoted pretty rapidly from its hawkish stance in 2018 to a more dovish outlook as it puts policy on ice. This change in tone grows directly from the FOMC’s observation of slowing growth in economic activity, namely household spending and business investment. The Fed also noted that employment gains have plateaued along with the unemployment rate, which nevertheless remains at very low levels.

So the federal funds rate looks to remain at 2.25% to 2.50% for a year or more, and the FOMC highlighted that this is the not-too-hot, not-too-cold level that for now best serves its dual mandate to “foster maximum employment and price stability.”

The Fed also released its Summary of Economic Projections (SEP). The March SEP indicated a median projected federal funds rate of 2.6% for 2020, which is why everybody is discussing the possibility of at least one, small increase next year.

For those who were really hoping for at least one more rate hike, all is not lost — Tendayi Kapfidze, LendingTree chief economist, believes we shouldn’t take March’s decision too gravely. “There are special factors that suggest the economy could reaccelerate,” he says. “The government shutdown threw a wrench into things, slowing some activity and distorting how we measure the economy.” He also remarks that since the financial crisis, data in the first quarter has continued to come in weak, still leaving room for everything to reaccelerate in the second and third quarters. He points to the already strong labor market as a plus.

Fed economic forecasts hint at a possible rate cut by the end of 2019. Just as the Fed projects a slightly higher federal funds rate in 2020, it also posted a projected 2.4% for 2019. Note that this projected rate falls below the upper end of the current rate corridor of 2.5%. This means the doves may want to see a possible rate cut if improvements in the economic outlook don’t materialize by mid-year.

When asked about this potential rate cut, Fed Chair Jerome Powell emphasized the Committee’s current positive outlook, while also emphasizing that it remains mindful of potential risks. Still, he maintained that “the data are not currently sending a signal that we need to move in one direction or another.” He also remarked that since it’s still early in the year, they have limited and mixed data to consult.

Kapfidze offers a more concretely positive outlook, noting that the chances of a rate cut are pretty slim. “To get a rate cut, you’d have to have sustained growth below 2%. There would have to be further weakness in the economy, like if trade deals get messier, to warrant a rate cut.”

The Fed downgraded its economic outlook for 2019 for the second time in recent months. In line with Kapfidze’s predictions, we did see a weaker economic outlook coming out of this month’s Fed meeting. The median GDP forecast for 2019 and 2020 decreased from December projections, while it remained the same for 2021 and beyond. This comes hand in hand with the decreased fed funds rate projections.

The FOMC increased their unemployment projections, which Kapfidze found surprising because the labor market has been so strong. “Maybe they believe that those numbers indicate a deceleration,” he said, “but really, it has to be consistent considering the other changes that they made.”

Why the Fed March meeting is important for you

It’s easy to let all of this monetary policy talk go in one ear and out the other. But what the Fed does or doesn’t change has an impact on your daily life. Without a rate hike since December, we’re already starting to see mortgage rates fall. This is helpful not only for those who want to buy a home, but also for those who bought homes at last year’s highs to refinance.

As for personal loans and credit cards, we may still see these rates continue to increase, just at a slower rate. These rates have little chance of decreasing because lenders may take the current weaker economic data as a sign that the economy is going to be more risky.

Deposit accounts will feel the opposite effects as banks may start to cut savings account rates. At best, banks will keep their rates where they are for now, until more evidence for a rate cut arises.

Our January Fed meeting predictions

Don’t expect a rate hike. The FOMC ended the year with yet another rate hike, raising the federal funds rate from 2.25 to 2.5%. It was the committee’s fourth increase of 2018, which began with a rate of just 1.5%.

But the January Fed meeting will likely be an increase-free one. Tendayi Kapfidze, chief economist at LendingTree, the parent company of MagnifyMoney, said the probability of a rate hike is “basically zero.”

Kapfidze’s assessment is twofold. First, he noted that the Fed typically announces rate increases during the third month of each quarter, not the first. This means a hike announcement would be much more likely during the FOMC’s March 19-20 meeting, rather than in January.

Perhaps more importantly, Kapfidze said there’s been too much market flux for the FOMC to make a new decision on the federal funds rate. He predicts the Fed will likely wait for more evidence before it considers another rate hike.

“I think a lot of it is a reaction to market volatility, and therefore that’s lowered the expectations for federal fund hikes,” Kapfidze said.

But if a rate hike is so unlikely, what should consumers expect from the January Fed meeting? Here are three things to keep an eye on.

#1 The frequency of rate hikes moving forward

It’s unclear when the next increase will occur, but the FOMC’s post-meeting statement could give a clearer picture of how often rate hikes might occur in the future.

The Fed released its latest economic projections last month, which predicted the federal funds rate would likely reach 2.9% by the end of 2019. This figure was a decline from its September 2018 projections, which placed that figure at 3.1%.

As a result, many analysts — Kapfidze included — are forecasting a slower year for rate hikes than in 2018. Kapfdize said some analysts are predicting zero increases, or even a rate decrease, but he believes that may be too conservative.

“I still think the underlying economic data supports at least two rate hikes, maybe even three,” Kapfidze said.

Kapfidze’s outlook falls more in line with the Fed’s current projections, as it would mean two rate hikes of 0.25% at some point this year. There could be more clarity after the January meeting, as the FOMC’s accompanying statement will help indicate whether the Fed’s monetary policy has changed since December.

#2 An economic forecast for 2019

The FOMC’s post-meeting statement always includes a brief assessment of the economy, and this month’s comments will provide a helpful first look at the outlook for 2019.

Consumers will have to wait until March for the Fed’s full projections — those are only updated after every other meeting — but the FOMC will follow its January gathering with its usual press release. This statement normally provides insight into the state of household spending, inflation, the unemployment rate and GDP growth, as well as a prediction of how quickly the economy will grow in the coming months.

At last month’s Fed meeting, the committee found that household spending was continuing to increase, unemployment was remaining low and overall inflation remained near 2%. Kapfidze expects January’s forecast to be fairly similar, as recent market fluctuations might make it difficult for the FOMC to predict any major changes.

Read more: What the Fed Rate Hike Means for Your Investments

“I wouldn’t expect any significant change in the tone compared to December,” Kapfidze said. “I think they’ll want to see a little more data come in, and a little more time pass.”

At the very least, the statement will let consumers know if the Fed is taking a patient approach to its analysis, a decision that may help indicate just how volatile the FOMC considers the economy to be.

#3 A response to the government shutdown

The big mystery entering January’s Fed meeting is the partial government shutdown. While Kapfidze said the FOMC’s outlook should be similar to December, he also warned that things could change quickly if Congress and President Trump can’t agree on a spending bill soon.

“The longer it goes on, and the more contentious it gets, the less confidence consumers have — the less confidence business have. And a lot of that could translate to increased financial market volatility,” Kapfidze said.

Kapfidze added that the longer the government stays closed, the more likely the FOMC is to react with a change in monetary policy. During the October 2013 shutdown, for example, the Fed’s Board of Governors released a statement encouraging banks and credit unions to allow consumers a chance at renegotiating debt payments, such as mortgages, student loans and credit cards.

“The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations,” the 2013 statement said.

What happened at the January Fed meeting:

No rate hike for now

In its first meeting of 2019, the Federal Open Market Committee announced it was keeping the federal fund rate at 2.25% to 2.5%, therefore not raising the rates, as widely predicted. This decision follows much speculation surrounding the economy after the Fed rate hike in December 2018, which was the fourth rate hike last year. In its press release, the FOMC cited the near-ideal inflation rate of 2%, strong job growth and low unemployment as reasons for leaving the rate unchanged.

In the post-meeting press conference, Federal Reserve Chairman Jerome Powell confirmed that the committee feels that its current policy is appropriate and will adopt a “wait-and-see approach” in regards to future policy changes.

Read more: How Fed Rate Hikes Change Borrowing and Savings Rates

Impact of government shutdown is yet to be seen

The FOMC’s official statement did not address the government shutdown in detail, although it was discussed briefly in the press conference that followed. Powell said he believes that any GDP lost due to the shutdown will be regained in the second quarter, providing there isn’t another shutdown. Any permanent effect would come from another shutdown, but he did not answer how a shutdown might change future policy.

What the January meeting bodes for the rest of the year

Don’t expect more rate hikes. As for what this decision might signal for the future, Powell maintains that the committee is “data dependent”. This data includes labor market conditions, inflation pressures and expectations and price stability. He stressed that they will remain patient while continuing to look at financial developments both abroad and at home. These factors will help determine when a rate adjustment would be appropriate, if at all. When asked whether a rate change would mean an increase or a decrease, he emphasized again the use of this data for clarification on any changes. Still, the Fed did predict in December that the federal funds rate could reach 2.9% by the end of this year, indicating a positive change rather than a negative one.

CD’s might start looking better. For conservative savers wondering whether or not it’s worth it to tie up funds in CDs and risk missing out on future rate hikes – long-term CDs are looking like a safer and safer bet, according to Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site. Post-Fed meeting, Tumin wrote in his outlook, “I can’t say for sure, but it’s beginning to look more likely that we have already passed the rate peak of this cycle. It may be time to start moving money into long-term CDs.”

Look out for March. Depending on who you ask, the FOMC’s inaction was to be expected. As Tendayi Kapfidze, LendingTree’s chief economist, noted [below], if there is going to be a rate increase this quarter, it will be announced in the FOMC’s March meeting. We will also have to wait for the March meeting to get the Fed’s full economic projections. For now, its statement confirms that household spending is still on an incline, inflation remains under control and unemployment is low. It also notes that growth of business fixed investment has slowed down from last year. As for inflation, market-based measures have decreased in recent months, but survey-based measures of longer-term inflation expectations haven’t changed much.

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Study: The Best Jobs for Working from Home

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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In recent months, clocking in from the comfort of your couch has become the new norm, as the coronavirus pandemic has transformed the landscape of the U.S. workforce by forcing millions of employees to adopt remote work. However, some occupations fare much better for remote work than others when it comes to salary potential and long-term demand.

A new study from MagnifyMoney identifies the best and worst jobs for remote work or telecommuting. For the purposes of this study, we looked at a multitude of metrics to determine a profession’s suitability for working from home, including how many people doing each job already work from home, earning potential and future growth in employment for each job.

Key findings

  • We found that the job of sales representative is No. 1 in best careers for working remotely. Roughly 13% of sales representatives work from home, and growth in demand for this job is expected to be very strong. The U.S. Bureau of Labor Statistics (BLS) predicts job growth of 7.2% over the ten years from 2018 to 2028 — that’s about 76,000 new jobs.
  • The No. 2 job for best telecommuting careers in our study is management analyst. This job has the fifth-highest work from home rate among the jobs we examined, and the BLS predicts strong growth in this field over the 2018-2028 period. However, be warned that recent data has shown earnings for management analysts are not rising at a high rate, suggesting there may be a ceiling – albeit a high one – on potential earnings.
  • Computer and information systems manager is ranked at No. 3 for best careers for remote work. Roughly 10% of workers in this occupation work from home. In addition to its high rate of remote work, this occupation is attractive because of the high pay: the average computer and information systems manager makes over $140,000 per year.
  • While they didn’t manage to crack the top 50 in our analysis, writers and authors are the jobs with the highest work from home rate. Data from the U.S. Census Bureau shows that about 2 in 5 writers and authors work from home.
  • Travel agents had the second-highest work from home rate. Roughly 30% of travel agents work from home.
  • About 29% of farmers, ranchers and agricultural managers work from home, making them the occupation group with the third-highest work from home rate.
  • Understandably, the bottom of the rankings largely consists of occupations where it is unrealistic to work from home, including many manufacturing and industrial jobs.

Top 5 jobs for working from home

Sales representatives

Topping our ranking of the best jobs to work from home is sales representatives. Sales reps were boosted by the metric that measured job growth and opportunities: We found that there is an expected job growth of 7.2% for sales representatives from 2018 to 2028. Currently, sales reps already boast a healthy work from home rate, with 13% of them working remotely. The one metric that sales representatives had a low ranking in was wages. In 2018, the median annual earnings was $54,550, ranking in the No. 63 spot for that metric.

Management analysts

In the second place spot for our ranking of the best jobs for working from home is management analysts, thanks to lots of potential employment opportunities and a remote-friendly work structure. This occupation had a strong showing for the metrics measuring the current work from rate, with 24% working from home — resulting in fifth place for that metric in our analysis — as well as the metric measuring the total employment change, with just over 118,000 jobs expected to be added by 2028.

Computer and information systems managers

Computer and information systems managers are ranked third in best jobs for working from home, according to our study. The overall ranking for this profession was boosted by wages — in 2018, computer and information systems managers had median annual earnings of $142,530, with a 2.40% growth in wages from 2017 to 2018, resulting in the second place spot for that metric in our analysis. Meanwhile, 10% of computer and information systems managers work from home, and there is a predicted job growth of 11% in the 2018-2028 period.

Market research analysts and marketing specialists

The fourth-best job for working from home according to our study goes to market research analysts and marketing specialists. With a healthy work from home rate of 14%, this occupation had strong rankings for the metrics measuring job growth: With a predicted addition of nearly 140,000 jobs by 2028, that’s growth rate of 20% over the decade, that’s a lot of opportunities.

Financial managers

Rounding out the top five for our ranking of the best jobs to work from home is financial manager. While financial managers currently have a somewhat low work from home rate of 4%, this occupation was boosted by strong rankings in other metrics. We found that financial managers had high annual median earnings in 2018 of nearly $128,000, a 2.30% growth from 2017. There’s also robust growth expected for the financial manager field, with an estimated 105,000 jobs added between 2018 to 2028, making for a rate growth rate of 16% over the period.

Worst jobs for working from home

A common theme among the best jobs for remote work is that many rely on technology that is easily accessible at home, namely computers and phones. Understandably, the opposite appears to be true for the jobs at the bottom of our study’s ranking, many of which rely on machinery or infrastructure that is not realistically accessible from one’s home. Many of these jobs are also estimated to decline in the 2018 to 2028 period, indicating limited and shrinking opportunity for work in these fields.

The worst job to work from home, according to our study, is forging machine setters, operators and tenders for metal and plastic. The name of the occupation itself indicates that this is likely not a job that can be performed at home, which explains its low work from home rate of 1%. Meanwhile, this occupation also had an expected loss of over 3,000 jobs by 2028, or a nearly 20% reduction over the period, underscoring the shrinking opportunity in this field.

Other occupations that fell to the bottom of our study’s ranking of the best jobs to work from home include rolling machine setters, operators and tenders of metal and plastic, pressers of textiles, garments and other related materials, tool and die makers and forest and conservation workers.

Jobs with the highest work from home rate

Our overall ranking took many metrics, such as wages and job growth, into consideration when determining the best jobs for working from home. However, one major consideration factor is how common remote work is in particular fields. While some jobs cultivate remote-friendly work cultures, others — like the manufacturing jobs mentioned above — are not able to realistically accommodate remote work.

If being able to work from home is your top priority, you might want to consider a job as a writer or author. This was the occupation with the highest work from home rate of our study, at a whopping 38%. Other jobs that boasted high work from home rates included travel agents (29%), farmers, ranchers and other agricultural managers (29%), door-to-door sales workers, news and street vendors and related workers (24%), management analysts (24%) and photographers (24%).

Methodology

For this study, MagnifyMoney looked at data for 579 occupations from the 2018 U.S. Census Bureau and the Bureau of Labor Statistics, comparing them on the following metrics:

  • Estimated employment change for 2018-2028. This shows the total new jobs for each occupation. A higher number indicates more potential employment.
  • Percent change in estimated employment change for 2018-2028. This shows how fast an occupation is growing or declining. Faster growth means greater long-term opportunity.
  • Percent of workers who work from home. A higher number indicates the job is more suitable for remote work.
  • Occupational openings for 2018-2028. This is the number of job openings projected between 2018-2028. A higher number indicates more opportunity.
  • 2018 median earnings. This is the median annual earnings for each occupation.
  • Percent change in earnings for 2017-2018. This is the percent change in earnings for each occupation from 2017 to 2018.

In order to create our final rankings, we first ranked each occupation in each metric. We then found each occupation’s average ranking across the metrics, giving a double weighting to self-employment rate. Using this average ranking, we assigned a score to each occupation. The occupations with the highest scores ranked first, while the occupation with the lowest score ranked last.

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