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January 13, 2017 Article 1 min read
Since the onset of the Great Recession, monetary policy has arguably been at the epicenter of the U.S. financial and investment universe.

Executive summary 

  • The final estimate of Q3 GDP indicated that the economy grew at a 3.5 percent clip, well above preliminary estimates. Although consumption remained a primary driver of growth for the quarter, consumer spending slowed to 3.0 percent, as other areas of the economy helped to boost growth.
  • Inflation measures have been somewhat mixed in recent months, but are edging gradually higher. The Consumer Price Index (CPI) reached 1.7 percent on a year-over-year basis in November. The core Personal Consumption Expenditures (PCE) Index dipped to 1.6 percent in November, remaining below the Fed’s 2 percent target.
  • Long-term interest rates rose substantially in the latter half of the quarter in anticipation of stronger economic growth in 2017 and a sharp uptick in inflation expectations. The 10-year U.S. Treasury yield ended the quarter at 2.45 percent, a meaningful rise from 1.60 percent at the end of Q3.
  • The economy added an average of 165,000 new jobs per month from October through December, indicating continued strength in the labor market. The unemployment rate also edged up to 4.7 percent in December, but remains below the 5.0 percent threshold.
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