Solid Payrolls

The solid jobs report allayed fears that companies spooked by the worldwide slowdown would chop payrolls just as they have done to capital outlays.

It also bolstered the Fed’s hopes that the consumer will continue to have the staying power to keep the expansion on track in the face of cutbacks by businesses.

Coupled with the policy message coming from Powell, the improved economic data prompted such Fed watchers as Michael Feroli of JPMorgan Chase & Co. and Matthew Luzzetti of Deutsche Bank Securities to rescind their forecasts of further rate cuts.

‘Material Reassessment’

Powell told reporters on Oct. 30 that it would take a “material reassessment’’ of the economic outlook for the Fed to change its current 1.5% to 1.75% interest rate target range.

In their September forecasts, policy makers saw the economy growing by 2% in 2020, inflation rising to near their 2% target and unemployment ending the year at 3.7%, according to their median projection. They’ll update predictions at their Dec. 10-11 meeting.

Speaking to Bloomberg Television on Nov. 1, Fed Vice Chairman Richard Clarida said if the central bank saw “accumulating evidence” that it was missing on its mandate for maximum employment or stable prices, or the growth needed to sustain both goals, “we would have to factor that in.”

Never Better

While saying that he still saw downside risks to the outlook, Clarida also highlighted the financial strength of U.S. households. “In the aggregate, the U.S. consumer’s never been in better shape,” he said.