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UK GDP Down in Q1 Amid Lockdown

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Richmond Fed Pres Barkin on Monday said "we have an outcome-based policy. When the outcomes look like substantial further progress, that is the time to talk about it [referring to when the Fed can start to consider tapering]. And he specifically identified substantial further progress in terms of the employment-to-population ratio: "Where we were in February of 2020 was 61.1, so I want to see substantial progress toward getting to 61."

  • NY Fed's Williams also noted Monday that he found the 'EPOP' ratio "useful".
  • Progress at the pace seen in March (+0.2pp to EPOP) would mean the ratio hits 61 in August 2022 from 57.8 last month. At the average monthly pace post-April 2020, it would get back by September 2021. See chart.
  • Markets appear to be girding for the latter scenario much more than the former, given expectations for the Fed taper to begin in late 2021/early 2022.
  • MNI addressed this in a March 3 policy exclusive: "Fed Targets EPOP Rebound, Sees Little Scarring". Notably, a senior advisor at Barkin's Richmond Fed told MNI: ""A very optimistic scenario [for a return of LFPR to pre-pandemic levels] is by the end of this year."


Source: BLS, MNI Calculations