Key Points From the Fed’s Latest Report on the US Economy


The Brexit confusion brews doubt

With Brexit commanding the headlines and thoughts of many investors, speculators are considering the near future and what it means to the world’s economy. The confusion has certainly had an impact on central banks and dismayed economic experts.

Much of the media’s focus is on a new administration or the leader of the Conservative Party (Tories), the Fed and on central banks. The decision to depart from the European Union has left a profound sense of doubt in the people.

Key Points from The “Squawk on the Street”

Well, according to Stanley Fischer, Federal Reserve Vice Chairman, now is not the time to judge how whether or not Britain’s choice to leave the European Union will affect the economy in the US.

During a televised interview (“Squawk on the Street,” CNBC) Fischer stated that it was a game of “wait and see. It clearly is a huge event for the UK and it’s an important event for Europe. Our direct trade with Britain is not going to make a huge difference to us, but… there are a lot of things that will follow from Brexit for Europe, for the United Kingdom, and those are the things we’ll have to be thinking about.”

Fischer also feels that the economy has “done pretty well,” although May’s job report was unsatisfactory and it likely prevented the Fed from hiking the rates last month. Furthermore, he did not think that the April’s report was in the least weak and that the “payroll growth of 160,000 is more than adequate.” However, the total amount of jobs in April was actually lower than that amount by 37,000 positions. The job market, in fact, increased in May with an additional 38,000 jobs, which is small in comparison to the six digit figure.

On another note, consumers spent more in April, which is a turn in the upward direction when compared to the first quarter’s review. The increase took everyone by surprise as it was rapid… faster than it’s been in several years.

The story on rising gold and silver

Gold is peaking right now and it’s heading into week five as the dollar falls on the down slope. It rose another 1% during the last week of June, while providing hope to those clouded by Brexit. Officials report a high of $1,338 per ounce and by 10:15 GMT, it stood at 0.9% ($1,333.80). Gold has had its biggest monthly increase since earlier this year of 8.8% during the month of June.

As a result of gold’s leap, silver’s riding piggy back with $19 per ounce, an 8% increase and it’s holding steady. This is a long time coming as silver has not seen these numbers in a couple of years (September, 2014).

The Fed’s latest report on the interest hike

Some influential figures debate over the fact that a tax increase should come later rather than sooner, or at least until the dust settles from the Brexit vote and the numbers on employment become clearer. Loretta Mester, Cleveland Fed President, voices her opinion during her speech given to a London business group on the risks of putting off another decision.

“Waiting too long increases risks to financial stability and raises the chance that we would have to move more aggressively in the future, which poses its own set of risks to the outlook.”

In addition, Mester believes that the Fed would benefit from navigating “back toward a more normal policy stance.”

The bill comes and Obamacare enrollment drops

A recent report by the Federal health force shows a slump in enrollment as of March 2016. In the beginning, 11.1 million individuals were active participants in Obamacare, however, that number has been reduced by 1.6 million. This comes at the end of the third quarter enrollment call in February. This is mainly because people did not make their first months payment or not at all. Of the 11.7 million people who enrolled in 2015, 10.2 million actually paid into the healthcare plan.

Robert Laszewski manages Health Policy and Strategy Associates and he claims that “the Obamacare exchange business has clearly hit a ceiling” and that he has this information from credible sources. As a matter of fact, Laszewski says that they “have a lapse rate of about 2 percent per month.”