Jobless Claims Fall Below Estimates, Fed Likely to Raise Rates
October 12, 2017
Trump to sign healthcare executive order; Jobless claims fall below estimates, producer prices rise; December rate hike very likely according to Fed minutes.
- Trump to sign healthcare executive order. The White House announced Thursday that the President would sign an executive order that would enable people to purchase bare bones health insurance coverage using so called association plans, allowing small businesses to band together and buy plans potentially below ObamaCare standards. Because the rule circumvents the ACA, the President is likely to face legal challenges. Healthcare economics experts say association plans will disrupt the delicate risk balancing in ObamaCare, leaving sicker and more expensive-to-treat patients behind in the exchange markets, driving up premiums. The administration also halved the open enrollment period, which begins the first of November, and cut the ObamaCare outreach budget by 90%. [Reuters]
Economic Indicators & News
- Jobless claims fall below estimates, producer prices rise. As the impact of September’s hurricanes continues to lessen, jobless claims fell this past week to 243,000, below 250,000+ analyst estimates. While producer prices rose, mostly on rising gasoline, the underlying economic data for the labor market and wholesale inflation is strong. Wholesale gasoline prices rose over 10% this month, but otherwise input prices have remained on an only slight uptick. Unemployment is at a 16.5 year low of 4.2% percent, painting a picture of an economy that can likely handle the impact of a Fed rate hike. [Reuters]
- December rate hike very likely according to Fed minutes. Minutes from the meeting of the Federal Reserve last month indicate that a December rate hike is all but certain, despite chronically low inflation. Meeting minutes revealed that FOMC felt one off price decreases, like falling prices for wireless plans, were significant contributors to historically low inflation rates. There was, however, some debate that the low inflation could be due to more persistent factors. The consensus was that a rate hike would occur this year, if the medium term economic outlook remained “broadly unchanged.” [CNBC]