Assessing the economic impact for a leap year is a question that still seems to be unanswered. In the UK the National Statistics Office adjusts GDP so that February is considered 28 and a quarter days long every year therefore avoiding any problems. In the States there is another problem with the leap year, the presidential election, with halls filled with voters and billions of dollars spent on getting to the winning line the Federal Reserve has to think carefully of any disturbances due to the various campaigns.
But what is obvious is that workers get to do an extra day's work for no extra pay every four years. However, this time round there are still 253 workdays in 2016 as December 31st is on a weekend due to the extra day in February. The last time a leap year had 253 working days was back in 1988. In 2012 and due to the Diamond Jubilee bank holiday there were only 252 workdays. In 2020 we will be back to 254 workdays due to the leap year, plenty of time to argue with management for an extra day off—Ha Ha.
So Janet Yellen and the FOMC have had an extra day of economic evidence to help assess the “goings on” in the US economy and as we have been told on numerous occasions, over many months, the “Fed is data dependent”. Their next meeting is coming along quickly with less than three weeks to March 16th and if they really are data dependent then recent data should ensure they move again.
January’s core PCE index hit 1.7% and the Fed’s target for year end is just 1.6% and so ahead of their expectations and well on the way to their 2% comfort level. We also have the unemployment rate at 4.9% which rests in the middle of their range they consider as “full employment”. However, dovish speeches from Fed governor Brainard, St Louis president Bullard and Atlanta President Lockhart, have effectively taken a hike in March off the table with the futures market pricing in only a ten percent chance of a near term move.
Between now and March 16th we have numerous economic releases including Non-Farm payrolls, Durable goods, CPI, PPI, retail sales, Industrial Production and housing starts and building permits and so the data dependent Fed has plenty of other information on its way, but at the moment data appears to be secondary to the commodity price collapse and global nervy stock markets if you listen to Fed members.