Things looked so clear back in mid-December. The Federal Reserve raised its benchmark interest rate from record lows, and it signaled the likelihood of four more hikes in 2016.
That was then.
Panicky financial markets, global weakness and slumps in key U.S. economic sectors have since clouded the outlook for more rate increases. Friday's jobs report for January further complicated things. It showed more pay for workers and rising confidence among job seekers.
So are further Fed rate hikes coming soon? No one seems sure. But as Chair Janet Yellen addresses Congress this week, most analysts and investors think the Fed will raise rates fewer than four times this year, if at all.
On Wednesday, Yellen will outline the Fed's outlook in the first of two days of semiannual testimony. It's unclear how much she'll say about the likely timetable for rate increases. She and other Fed officials have stressed that their decisions remain "data dependent" — that is, hinge largely on the latest economic data.
Much of that data has been tepid since the Fed raised rates in December for the first time in nearly a decade. Manufacturing has slumped. Corporate profits are down. Business stockpiles are up. Shrunken oil prices have squeezed energy companies. Weakness in China and other emerging economies has rattled investors.
On the other hand, the job market — the most vital part of the economy — remains solid. Worker pay is even starting to show its first significant gains since the Great Recession ended 6½ years ago. The Fed has long awaited faster wage growth for evidence that the job market is as strong as the steady hiring gains and low unemployment rate (now 4.9 percent) would suggest.
Once the Fed began raising rates late last year, the widespread expectation was that it would continue to boost its benchmark rate gradually but steadily, most likely starting in March. But that was before China, the world's second-largest economy, signaled that it was slowing even more than expected and oil prices resumed their fall. Global markets have sunk in response. The Dow Jones industrial average has dropped 7 percent so far this year. The tech-heavy Nasdaq has shed 13 percent.
The value of the dollar has also strengthened further, crimping manufacturers, whose export sales fell last year for the first time since the recession year of 2009. A key manufacturing gauge has been in recession territory for four months.
The overall economy grew at a meager 0.7 percent annual rate in the October-December quarter, leading some analysts to begin wondering about the possibility of another recession within a year or two.
"If you look at the economic data that has come out since December, it shows considerable weakness," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "Given all the domestic and global economic problems right now, there is no justification for raising rates."
Sohn expects no rate increases in 2016. And a widely followed gauge of investor expectations now foresees only a 25 percent likelihood of a Fed hike this year. The likelihood of a March rate increase is pegged at just 4 percent.
Sohn said he expected Yellen, in speaking to Congress, to leave the door open for a gradual rise in rates if market conditions stabilize and the economy rebounds. Some analysts say they think her testimony will echo comments the Fed's vice chair, Stanley Fischer, made in a speech last week.
Fischer took note of the market turmoil, diminished oil prices and strengthened dollar and said, "If these developments lead to a persistent tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the United States."
Fischer noted, though, that previous periods of market volatility had had no permanent impact on the economy.
"We simply do not know" the timing and pace of future rate hikes, he said.
David Jones, an economist and author of several books on the Fed, said: "Yellen is going to emphasize that the Fed is watching global market volatility very closely to determine if that volatility becomes severe enough or lasts long enough to dampen U.S. economic growth."
Jones said he expects two rate hikes this year, beginning no earlier than June.
One reason for expectations of fewer rate increases is that financial markets are, in effect, doing the Fed's work in tightening credit. Some analysts say the fallen stock prices and the dollar's higher value, which slows growth by reducing exports and shrinking corporate profits, represent the equivalent of perhaps a 1 percentage point increase in rates.
"All the market indicators are flashing yellow," said Brian Bethune, an economics professor at Tufts University, who also expects just two rate increases in 2016 beginning in the second half of the year.
That said, economic developments, which have seemed to deteriorate quickly, could reverse course just as fast. China could succeed in stabilizing its markets. Oil prices could stop falling. U.S. growth could rebound.
Such developments would put the Fed back on course to raise rates, said Paul Ashworth, chief U.S. economist at Capital Economics.
Ashworth foresees the next rate hike in June. By then, he thinks "commodity prices should have leveled out and fears about a collapse in China and a U.S. slowdown will have faded."