Sharp decline in inflation expectations is welcome news for the Fed.
Kieran Clancy (U.S. Economist)U.S.
No labor market rollover yet, and none appears imminent
Ian Shepherdson (Chief Economist and Founder)U.S.
- Homebase and the ISM services employment index signal upside payroll risk for November.
- But the underlying state of the labor market is weakening, and wage growth is slowing.
- Look at the Michigan expectations index, not the headline; it’s a better predictor of actual spending.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The gap between the GDI and GDP numbers is unusually large by historic standards...
- ...Undercounting of interest payments means that big upward revisions to GDI are a good bet.
- ISM services signals modest and steady growth, but hints at a hefty bounce in October payrolls.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Higher rates and tighter lending standards are depressing credit and constraining spending…
- …But the hit is modest, so far, and the deterioration in credit quality is not yet alarming.
- Initial jobless claims are wild around Thanksgiving, but look for a further increase in continuing claims.
Ian Shepherdson (Chief Economist and Founder)U.S.
Still no sign of a rollover in services.
Kieran Clancy (U.S. Economist)U.S.
- The quits rate fell much further than implied by the drop in unemployment during the Great Rehiring…
- …It correctly signalled that wage gains would rocket, but now it tells the opposite story.
- ISM services has tracked sideways in recent months, net; the pattern likely continued in November.
Ian Shepherdson (Chief Economist and Founder)U.S.
Stuck in a rut, with few signs of an improvement ahead.
Kieran Clancy (U.S. Economist)U.S.
- Chair Powell’s heart is no longer in the optionality story; he repeated it Friday but it’s no longer realistic.
- The continued shrinkage of the M2 money supply is disconcerting, even for non-monetarists.
- The manufacturing sector is in the doldrums, and auto sales are now trending down.
Ian Shepherdson (Chief Economist and Founder)U.S.
The leap in the Chicago PMI likely is noise, not signal' a modest recovery in home sales lies ahead.
Kieran Clancy (U.S. Economist)U.S.
Core inflation is falling; spending is softening.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Core PCE inflation is fading rapidly; in recent months it has run only just above 2% on a sequential basis.
- Consumption spending slowed at the start of Q4, but likely is on course to rise at a 2%-plus rate.
- Look for only a modest bounce in the ISM manufacturing index, despite the leap in the Chicago PMI.
Ian Shepherdson (Chief Economist and Founder)U.S.
Net trade unlikely to be a major swing factor in Q4 GDP growth.
Kieran Clancy (U.S. Economist)U.S.
- The October PCE data likely will confirm that core disinflation continues, but still has a way to go.
- Spending growth appears to have moderated, though one softer month proves nothing.
- Jobless claims likely rebounded last week, though the Thanksgiving seasonals are tricky.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Treat everything you read about holiday spending with great skepticism; reliable data don’t exist.
- Even the official retail sales numbers can’t be trusted until after at least one round of revisions.
- The trade deficit was wild during and immediately after Covid, but it’s much calmer now.
Ian Shepherdson (Chief Economist and Founder)U.S.
The trend in new home sales is flattening.
Kieran Clancy (U.S. Economist)U.S.
- Gas and stock prices have an outsized influence on consumers’ confidence indexes, politics matters too.
- The expectations subindexes historically have been a decent guide to real consumption spending.
- Monthly swings in new home sales are mostly noise, but the trend is now flattening.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Business CapEx looks to have stalled at the start of Q4, hit by rates and tight credit conditions.
- Equipment spending is on course to fall for a second straight quarter, with only modest gains elsewhere.
- Jobless claims surprised to the downside last week, but we expect a rebound in this week’s report.
Ian Shepherdson (Chief Economist and Founder)U.S.
Business equipment investment on course for another decline in Q4; too early to conclude that claims are flattening.
Kieran Clancy (U.S. Economist)U.S.
