LABOR MARKET WARNING SIGNS ARE FLASHING RED…
- …BUT CHAIR POWELL SEES NO “CRACKS”
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Too volatile to make us fear a renewed downturn in manufacturing.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Homebase data point to a mere 120K rise in private payrolls in April, but the range of possible prints is wide.
- Strong March retail sales and upward revisions mean Q1 consumption likely rose by more than 3%.
- The early Easter likely depressed housing starts in March, offsetting support from further mild weather.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Slowing wage gains, normalized supply chains, and a shrinking money supply will constrain inflation…
- …But anything can happen over periods as short as a few months, and the Fed is backward-looking.
- March core retail sales appear to have been soft, capping a sluggish first quarter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Goods disinflation continues; margins and other services still sticky.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Some downside growth risks recognized, but attention still mostly on inflation
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- March CPI and PPI data point to a 0.3% rise in the core PCE deflator, with an outside chance of a 0.2% print.
- Personal tax refunds so far in 2024 are little changed compared to last year, but that could still change.
- Higher gas prices probably mean a small fall in the Michigan sentiment survey from its recent highs.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Almost half of the rise in March core CPI services ex-rent prices was due to a wild jump in auto insurance.
- We’re raising our near-term forecasts for rents and hospital services prices, but retaining our optimistic outlook.
- Core PPI inflation should be depressed by falling margins, driven by slowing growth in core retail sales.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The balance of risks points to a decent chance of a 0.2% core CPI print for March, a tenth below consensus.
- Zillow data signal a modest rise in primary rent; OER is wild but likely won’t rise much faster than primary rents.
- Both used vehicle and hotel room prices probably fell in March; the early Easter might depress goods prices too.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Revisions between the first and third payroll estimate have become bigger and increasingly negative.
- Under pressure SMEs likely are under-represented in the first estimate; expect larger downward revisions in Q2.
- We expect another fall in the NFIB index in March, as small businesses remain under pressure.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The initial March jobs numbers were even stronger than Homebase implied, but things can change…
- ...We’re sticking to our base-case view that payroll growth will slow markedly in the second quarter.
- Monetary tightening works with long lags, and multiple indicators now point to slower hiring and rising layoffs.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Homebase jobs data signal March strength; we expect 225K headline payrolls and 175K private…
- ...But the NFIB survey’s hiring intentions measure points to much weaker numbers in Q2.
- Low snow cover likely boosted hours worked and depressed AHE, but the Fed only cares about the ECI.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The plunge in ISM services prices paid to a four-year low points to much slower core services inflation.
- Light vehicle sales slumped in Q1, dragging on overall consumption growth.
- Initial jobless claims likely rose modestly last week, but a sharp increase is likely in the coming months.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Expect little change in the ISM services index today; either way, it’s a poor guide to services spending.
- The ADP employment report is hopelessly unreliable; take it seriously at your peril.
- The JOLTS quit rate is consistent with much weaker wage growth across the spring and summer, at least.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Core prices back on track; real after-tax income growth slowing sharply
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The JOLTS quit rate flagged the surge in wages during the Great Rehiring. It now points to a sharp slowdown.
- Vehicle sales were probably little changed in March, suggesting a drag on Q1 consumption growth.
- A nascent recovery in manufacturing is finding its feet, but core goods prices look set to continue falling.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- February’s subdued core PCE price data support the idea that January’s spike was a one-time fluke.
- Consumption is on track for a 2% gain in Q1, down from 3.3% in Q4, and real income growth is slowing
- A modest uptick in ISM manufacturing is a decent bet, but the sector remains weak.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
