Explained | Charting the Fed's economic data flow

The US Federal Reserve concludes its latest policy meeting on Wednesday and is almost certain to hold the benchmark overnight interest rate steady in the 5.25 per cent to 5.5 per cent range, where it has been since July.

Of more note, new economic projections will show whether policymakers still anticipate approving three quarter-point rate cuts by the end of the year, an outlook they have held since December, or whether stronger than expected inflation leads them to scale that back.

Data since the Fed last met on Jan. 30-31 has done little to build confidence inflation will continue falling to the central bank's 2 per cent target, a condition for the start of rate cuts, or suggest that the economy is slowing so much it warrants a rate cut in response.

Here's what's been happening since the Fed's last meeting:

INFLATION (CPI released March 12; next release PCE March 29)

The CPI rose 3.2 per cent on a year-on-year basis in February, a tick up from 3.1 per cent in the prior month, and higher than analysts expected. The core rate excluding food and energy costs, meanwhile, only edged down to 3.8 per cent from 3.9 per cent, another reminder that the Fed's inflation battle may last longer than anticipated. Rising gasoline and shelter costs contributed the bulk of the CPI increase. Whether the Fed's hoped-for consistent easing in housing costs is imminent remains uncertain.

The personal consumption expenditures (PCE) price index, which the Fed uses to set its 2 per cent inflation target, increased at a 2.4 per cent annual rate in January, the slowest year-on-year increase in nearly 3 years. Core inflation stripped of volatile food and energy prices rose 2.8 per cent, a slight decline from December's 2.9 per cent reading.

EMPLOYMENT (Released March 8; next release April 5):

US firms added a larger-than-expected 275,000 jobs in February, though employment gains in the previous two months were revised lower by 167,000. The unemployment rate rose to a two-year high of 3.9 per cent as a rise in the size of the workforce was outweighed by a larger increase in the number of people reporting they were out of work.

Fed officials have become more comfortable with the idea that continued strong job growth could still allow inflation to fall, especially if the supply of labor continues to grow and wage growth eases.

On the wage front, growth eased on a month-to-month basis to just 0.1%, the smallest increase in two years and essentially neutralizing the unexpectedly strong jump in hourly pay the month before.

The annual increase, meanwhile, slowed to 4.3 per cent from 4.4 per cent. While marking further progress, that level is still well above the 3.0-3.5 per cent range that most policymakers view as consistent with the Fed's 2 per cent inflation target.

JOB OPENINGS (Released March 6; next release April 2)

Fed Chair Jerome Powell keeps a close eye on the U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS) for information on the imbalance between labor supply and demand, and particularly on the number of job openings potentially available to each person who is without a job but looking for one. The ratio had been falling steadily towards its pre-pandemic level, but has stalled for the last four months at just above 1.4-to-1, higher than the 1.2-to-1 level seen before the health crisis. Other aspects of the survey, like the quits rate, have edged back to pre-pandemic levels.

RETAIL SALES (Released Feb. 15; next release March. 14):

Retail sales fell more than expected in January, dropping 0.8 per cent. They were pulled down by declines in receipts at auto dealerships and gasoline service stations, and consumer spending was also likely weighed down by winter storms. The decline followed a fairly strong performance over the holiday season and could indicate economic growth will slow sharply this quarter.

If it does, it would finally be a sign the aggressive rate hikes Fed policymakers delivered from March 2022 to July 2023 are trimming overall demand for goods and services in what has up to now been a markedly resilient economy.