Unwinding of the UAW strike hit boosts manufacturing, but output ex-autos remains weak.
US
Real consumption is on course for a solid Q4, but slower than Q3.
US
- Retail sales data suggest Q4 consumption is on course for a 2½% gain, but that could change.
- Households’ real liquid assets are back to their pre-Covid trend; the pandemic excess is gone.
- Manufacturing production likely rebounded strongly last month after the UAW strike, but the trend is flat.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Chair Powell says the Fed is done—probably—but still doesn’t want to talk about when they’ll ease.
- The inflation forecasts still look very cautious, and likely will be undershot.
- Headline November retail sales constrained by cheaper gas, but the core likely was soft too.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Margins have stopped rising, but yet to start falling, auto dealers excepted.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The FOMC likely will cut its inflation and interest forecasts, but will push back against easing talk.
- Core disinflation pressure remains intense, but core services inflation is still too high.
- PPI margin inflation is now close to zero, but it could easily fall well below zero next year.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We look for a 0.2% November core CPI print, but a 0.3% increase is more likely than 0.1%.
- The bigger picture, though, is that core disinflation is well underway, and has much further to run.
- The NFIB index likely rebounded in November, but the details of the survey are what matter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Sharp decline in inflation expectations is welcome news for the Fed.
US
- The most important number Friday was the steep drop in consumers’ inflation expectations…
- …The reported dip in the unemployment rate was much too small to be statistically significant.
- Growth in cyclically-sensitive payrolls is now quite slow, but it’s unlikely to roll over anytime soon.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
No change to the benign picture.
US
- 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, Chairman and Founder)US
- 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, Chairman and Founder)US
- 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, Chairman and Founder)US
Still no sign of a rollover in services.
US
- 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, Chairman and Founder)US
Stuck in a rut, with few signs of an improvement ahead.
US
- 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, Chairman and Founder)US
