Fed Vice Chair Richard Clarida said in a speech, there have been some weaker than expected data in recent months. Services spending remained “well below pre-pandemic levels”. Improvement tin labor markets has “slowed notably”, with “true unemployment rate” closer to 10% level. Core PCE inflation was just running at 1.5%.
There were also some encouraging data as retail sales “stepped up considerably” in January. Housing sector has “more than fully recovered from the down turn”. Business investment and manufacturing production have “rebounded robustly”.
Overall, vaccine developments, and the new fiscal relief measures indicated that “the prospects for the economy in 2021 and beyond have brightened and the downside risk to the outlook has diminished.”
