- Growth in bank lending to businesses is grinding to a halt; the SLOOS survey signals continued weakness.
- The jump in ISM services prices will matter only if it is sustained; brief swings usually are just noise.
- The sharp drop in unit auto sales in January means total retail sales likely were little changed.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Head-scratching numbers kill March stone dead, and threaten May too
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We think total payrolls rose by about 225K in January, comprising 175K private and 50K government.
- Similar gains are likely through the end of Q1, but we expect a meaningful slowing in job gains in Q2.
- Don’t worry about the jump in ISM prices paid; it’s an unreliable guide to CPI core goods prices.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Fed wants to see confirmation of its base-case forecast that inflation is headed to target…
- …If the data before March are favorable, the first ratecut will come at that meeting, but no guarantees.
- The ISM manufacturing survey likely will show that the industrial economy is still in a hole.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Fed probably will abandon the idea of further hikes today, but won’t commit to easing timing.
- The Q4 employment costs index today is key; a further slowing would make a March easing more likely.
- The jump in December job openings is noise; the falling quits rate is much more important.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We’re much more interested in the JOLTS quits rate than the headline job openings number…
- …Surging quits warned of the 21-to-22 jump in wage gains; the signal now is to the downside.
- Soaring stocks and cheaper gas are boosting consumers’ sentiment; will spending follow?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Core inflation falling steadily across all three components.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Inflation matters more than the GDP overshoot, and it looks great.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The excellent Q4 inflation numbers are much more important than the overshoot in Q4 GDP growth.
- The core PCE deflator likely rose 0.2% in December, but 0.1% is much more likely than 0.3%.
- Pending home sales probably rebounded strongly in December, with further gains ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see downside risks for Q4 GDP growth, but the uncertainties over inventories and trade are great.
- The core PCE deflator likely rose at a 2.0% annualized rate for the second straight quarter.
- December’s durable goods orders likely flattered by aircraft; new home sales probably rebounded.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Housing market activity looks primed for a rebound this year, but no return to Covid-boom levels.
- Residential construction will provide a small boost to overall growth, partly offsetting weakness elsewhere.
- The upturn in existing home prices requires more supply, which means prices will flatline, at best.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Risks to Thursday’s Q4 GDP print are mostly to the downside, but trade and inventories are wildcards.
- Solid consumption propelled final demand, offsetting sluggish business capex and flat housing spending.
- The core PCE deflator probably rose at a 2.0% annualized rate, for the second straight quarter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The House likely will vote to prevent a government shutdown today, but no real progress on spending.
- Governor Waller doesn’t know how the CPI revisions will play out, they’re as likely to be good as bad.
- Existing home sales likely little changed in December, but consumers’ confidence is improving.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The December retail sales report was much stronger than expected, and revisions were minimal.
- We now think real consumption spending rose at a 2.6% annualized rate in the fourth quarter.
- The Fed would prefer softer numbers, but what really matters to policymakers is the inflation picture.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
