Weekly Update
May 18, 2026
Upcoming Events
Tuesday, May 19
Waller Speaks at International Research Forum on Monetary Policy
Paulson Speaks at Financial Markets Conference
Wednesday, May 20
FOMC Minutes Release
Barr Speaks at Financial Health Network’s EMERGE Financial Health Conference
Thursday, May 21
GDPNow Update
Friday, May 22
Surveys of Consumers Update
Waller Speaks at Centre for Central Banking Event
Recent News
Out with the old… Jerome Powell’s term as Federal Reserve Chair ended on Friday. He is widely lauded for steering the economy through the pandemic, bringing down inflation without causing a recession, and defending the Federal Reserve’s independence. But Powell’s record is somewhat mixed.
Under Powell’s leadership, the Fed prevented a deep recession. But it was slow to spot the surge in demand in 2021 and slow to adjust policy once noticing. It also failed to bring inflation back down to target.
Powell initially did little to abate the Fed’s mission creep into politically-charged areas like social justice and climate policy. But the Fed has taken a step back in both areas over the last 16 months.
Whereas Powell has publicly resisted pressure from President Trump, some believe he delayed tightening in late 2021 and early 2022 in order to secure another term as chair. His decision to stay on as governor after the Department of Justice dropped its criminal investigation also appears political.
What can one say about Powell’s legacy at the Fed? It could have been better. It could have been worse.
In with the new… The Senate confirmed Kevin Warsh for the top spot at the Fed last week in a near party-line vote. All Republicans voted to confirm. All Democrats save two voted against: Sen. John Fetterman (D-PA) voted to confirm, Sen. Kirsten Gillibrand (D-NY) didn’t vote.
Powell will serve as acting leader until Warsh is officially sworn in.
Prices… Inflation declined in last month but remained elevated, new data from the Bureau of Labor Statistics show. The Consumer Price Index grew at a continuously compounding annualized rate of 7.7 percent in April 2026, down from 10.3 percent in the prior month. CPI inflation has averaged 4.7 percent over the past six months and 3.7 percent over the past year.
Core inflation, which excludes volatile food and energy prices, surged. Core CPI grew at a continuously compounding annualized rate of 4.5 percent in April 2026, up from 2.3 percent in the prior month. Core CPI inflation has averaged 2.8 percent over the past six months and 2.7 percent over the past year.
Production… Industrial production increased 0.7 percent in April 2026, new data from the Fed show. Industrial production was 1.3 percentage points higher than its year-earlier level. It was 1.4 percentage points higher than it was in January 2020, just prior to the pandemic.
Capacity utilization was 76.1 percent in April, up from 75.7 in the prior month. It was roughly unchanged from its year-earlier level and 3.3 percentage points below its long-run average.