Three Relevant Charts for Today’s Economy

LPL’s Chief Economist, Dr. Jeffrey Roach, explains why retail rates should fall later this year, the new sector rotations, and impacts of federal layoffs.

Last Edited by: LPL Research

Last Updated: March 20, 2025

econ market minute graphic

Jeffrey Roach (00:03):

Hi, I am Jeffrey Roach, Chief Economist for LPL Financial with three key charts to explain the current macro landscape. First, prime rates should fall this summer. The Federal Open Market Committee, the entity that sets monetary policy met on March 19 and did not change the target range, but we expect policy to loosen a bit in the summer. This has direct impact on retail consumer rates, as I show in this chart of the prime rate and the Fed's target rate. Now, one of the reasons the committee has not altered policy since December is the uncertainty about inflation, specifically the upside risk to inflation from trade wars. Perhaps we get a one-time step up in inflation for some goods, but if we can avoid an all-out trade war, we should expect inflation to moderate throughout the year. Second, discretionary sector softer than non-discretionary. Consumers pulled back discretionary spending last month reversing an improving trend we started seeing last month.

Jeffrey Roach (01:00):

Here I'm showing Visa's spending momentum index a metric based on real time transactions tied to actual consumer spending activity. I think investors will sniff out any hints of consumer weakness, especially from the luxury retailers, and that could be a leading indicator for the overall economic trajectory. Third, cutting government jobs won't raise unemployment rate. President Bill Clinton initiated significant cuts to the federal workforce during his administration. The effort began with the National Performance Review in March 1993, his version of DOGE. Over his eight-year term, Clinton reduced the federal workforce by approximately 380,000 jobs, which was about a 16% decrease. Now, during this time, unemployment fell as the laid off workers were easily able to find new employment. Given the tight labor market, I don't think federal workers will have any difficulty getting rehired. So sure, some monthly job reports could be soft, but I don't see this giving any serious ripple effects across the job market. That's all for now. If you want more insights on global market trends, follow us on social media and take care cure.

 

LPL’s Chief Economist, Dr. Jeffrey Roach, explains why retail rates should fall later this year, the rotation away from discretionary spending, and why government layoffs might not have ripple effects.

Tune In Now

You can find Econ Market Minute on the LPL Research YouTube channel and Apple Podcasts.

 

You may also be interested in:

Keep Up With Market Insights

LPL Research brings the market directly to you with a publication lineup that moves as quickly as the market. Drill down into the details with daily and weekly commentary.

Stay in the Know

Weekly Market Commentary

Get your weekly recap of the stock market, the Fed and everything else in between, in this weekly publication — an LPL fav. Learn what the research team has to say.

Get your Weekly Recap

Macro. Market. Movers.

Read the hottest topics of the day from LPL Research’s thought leaders. From stocks and bonds, the latest data from the government, and everything else.

Visit the LPL Research Blog

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet or Bloomberg.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

Not Insured by FDIC/NCUA or Any Other Government Agency

Not Bank/Credit Union Guaranteed

Not Bank/Credit Union Deposits or Obligations

May Lose Value

RES-0003084-0225 | For Public Use | Tracking #712803 (Exp. 03/26)