Warsh Maps Out Data Dashboard for Reading US Economy

Fed Chairman Kevin Warsh has provided insight into his approach to policy making by outlining key data points he uses to read the US economy. Speaking at Jackson Hole, Wyoming, Warsh described capital expenditures as 'the seed corn of future economic growth,' citing a rise in investment in equipment and intangibles with a four-quarter change of around 9%, its highest growth rate since 2021.

Credit spreads on corporate bonds and leveraged loans are near the low end of their historical ranges, suggesting high confidence among investors. Warsh also highlighted private domestic final purchases, which rose by almost 3% this year, a measure that typically carries more signal than gross domestic product.

The chairman acknowledged low turnover in jobs but attributed it to rematching between employers and employees after the pandemic. He also noted that the slow growth rate of labor supply would naturally keep a lid on jobs gains. Despite pockets of weakness, Warsh said people who want to work are holding or finding jobs.