The December meeting of the US central bank is currently under way and speculation is rife that the Fed Chairman, Janet Yellen, and team will raise interest rates. This is the first time this has occurred since June 2006 (moving from 4.99% to 5.24%) when iPhones were not even in existence and the number one song was about the honesty of Shakira’s hips.
Graph courtesy Federal Reserve bank of St Louis: https://research.stlouisfed.org/fred2/graph/?g=H2E)
With this decision coming in the next 24 hours we thought it would be a good opportunity to dive into our data to show what could potentially happen, especially to product groups that are likely to be impacted by a rise in rates.
The following analysis looks at how sales and margin growth (year on year) performance was affected for these product groups in the lead up to the rate rise and then the next few months after the rate rise. Per the following graphs the strong performers are shown in the top right quadrant and poorer performers are in the bottom left.
2 key industries we want to highlight are the automobile and housing sectors as they are likely to feel the effect of a rate hike.
We have chosen July 2004 as the rate hike to analyse as this came just after rates had been held low for some time (similar to our current situation) and was succeeded by a number of rate rises (4 more in 2004, 8 in 2005).
Producers of Motor Vehicles & their engines (US34.1)