The fed responds to unemployment and inflation (hiking rates cools down economy and combats inflation). It targets a 2% inflation rate. Inflation is currently at 2.67%
The fed generally optimizes for "maximum employment"; when unemployment is around 4%. Unemployment is currently at 4.1%, an incremental change of -0.1% from 1 month ago, and 0% from 6 months ago.
Due to the factors above, Kalshi puts the probability of "Will the Federal Reserve Hike rates by 0bps at their March 2025 meeting?" at 99%. The current effective fed funds rate is 4.33%. (Avg. Nat'l Mortgage Rate @ 6.75%).
Latest Yield Curve is at 0.52 (10 yr - 2 yr), signaling that investors have expectations of moderate economic growth in the near term. Based on trailing 2 year data, this can be seen as recovering from inversion or stabilizing. Compared to last 10 years:
Consumer Sentiment is at 52.2 (as of 2025-05-01), implying that consumers are cautious or uncertain (70-90) on the future of the US economy.
Household Debt Service Ratio is at 11.25%. This includes credit card and mortgage debt; it's a measure of how levered US households are. Compared to the last 10 years: