A new cycle low, but a modest rebound is coming soon.
US
- The upturn in jobless claims bears close attention, though it’s much too soon to panic.
- Ignore the wild durable goods headline; core capex orders are rising, but other data are less benign.
- Consumers’ sentiment likely will respond to cheaper gasoline; will inflation expectations do the same?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Homebase small business employment data point to a hefty rebound in November payrolls...
- ...But the margin of error in all payroll forecasts is huge; the seasonals are an intractable problem.
- No bottom yet for existing home sales, but supply is edging up, and valuations are falling as incomes rise.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
The recovery in construction activity is stalling, for now.
US
Likely to improve from here, but only very slowly.
US
Most of the October weakness reflects the UAW strike; expect a November rebound.
US
Layoffs hit 12-week high, but remain below cycle peaks, for now
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The rebound in jobless claims in recent weeks is not yet definitive evidence of a shift in the trend.
- The multi-family housing construction boom is over, though single-family starts are still rising.
- The steep drops in manufacturing output and homebuilder sentiment reported yesterday won’t last.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The House Continuing Resolution kicks the can down the road to January and February; it solves nothing.
- October's retail sales numbers are consistent with a clear slowing in Q4 consumption growth.
- PPI disinflation continues; the October numbers, alongside the CPI, signal a 0.25% core PCE print.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
The summer spending surge is fading.
US
The (almost) final nail in the coffin of the Fed's rate hike optionality
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Markets have broken decisively from the Fed; inves- tors no longer believe in rate hike optionality.
- Core CPI inflation ex-rents is now just 2.0% and fall- ing, and the pace of rent increases will slow sharply.
- We’re sticking to our call for the first easing in March, but we doubt Chair Powell will quickly declare victory.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- October’s core CPI probably rose 0.4%, but the risks are biased to the downside.
- Hotel room rates, health insurance and new vehicle prices all seem likely to have pushed up the core.
- Our medium-term optimism remains, but disinflation won’t proceed in a neat straight line every month.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
The jump in inflation expectations probably is temporary, but the Fed won't like it.
US
Nudging back up, but no sustained increase visible on the near horizon
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Households’ debt service ratios have edged higher since the Fed starting raising rates, but remain low.
- Debt service costs will rise further, but are unlikely to trigger sudden cuts to discretionary spending.
- Consumers’ sentiment likely improved in November, and inflation expectations probably fell.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Our base case forecast is immaculate disinflation; no recession but inflation heading back to the target.
- The net risk, though, is of a steeper downturn as businesses react to margin pressure with big layoffs.
- In that case, inflation will fall faster and the Fed will cut aggressively, but credit and some stocks will suffer.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Inventories are noisy and can’t be forecast with confi- dence, but signs point to drag on Q4 GDP growth.
- Real personal incomes after tax fell outright in the third quarter, but will rebound in the fourth...
- ...Spending, though, likely will head in the opposite direction, we see few signs of an impending rollover.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
