Used cars hit again, but for the last time; decent chance of a 0.2% July core
Kieran Clancy (U.S. Economist)U.S.
Still signalling recession, despite stock price bounce.
Kieran Clancy (U.S. Economist)U.S.
- The core CPI likely rose 0.4% in May, but used autos, airline fares and lodging costs are wild, again.
- The net risk to consensus likely is to the downside, and pipeline pressure continues to fade.
- Look behind the NFIB headline index today for the real story; small businesses are suffering.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The Fed likely will leave rates on hold this week, but the median dot will rise, signalling one more hike...
- ...Whether that hike happens will depend on the incoming inflation and labor market data.
- A soft economy is visible everywhere except in the payroll and inflation data, but that will change.
Ian Shepherdson (Chief Economist and Founder)U.S.
- People are still running down excess savings accumulated during Covid, boosting spending…
- …But this boost will soon fade; only a third of excess savings remain, and they are unevenly distributed.
- The spike in jobless claims is not necessarily a signal of labor market weakening; more data are needed.
Ian Shepherdson (Chief Economist and Founder)U.S.
Huge jump in claims is in line with other indicators, but it's too soon to call a decisive break to the upside.
Kieran Clancy (U.S. Economist)U.S.
- Both the Challenger layoff announcement data and NFIB hiring intentions signal higher jobless claims.
- Tighter credit conditions and soaring interest rates mean the inventory correction has some way to run.
- The inventory drag on Q2 GDP growth likely will be about three-quarters of a percentage point.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Lower gas prices and slowing real consumption growth are depressing consumer credit growth.
- The sudden widening of the trade deficit in April likely was mostly in the oil component; it will persist...
- ...So net foreign trade is set to be a substantial drag on Q2 GDP growth.
Ian Shepherdson (Chief Economist and Founder)U.S.
Softening, pointing to slower growth in payrolls and wages.
Kieran Clancy (U.S. Economist)U.S.
- Home sales and housing starts are unlikely to fall much further this year, after cratering in 2022...
- ...But the drop in home prices is still in its infancy; we expect a 15% peak-to-trough decline.
- The ISM surveys show that services are still outperforming manufacturing, but the gap is narrowing.
Ian Shepherdson (Chief Economist and Founder)U.S.
- If recent payroll numbers persist, the likely June pause won’t last; they’ll hike again later...
- ...But payrolls are being lifted by exceptionally generous seasonals and the birth/death model...
- ..So the risk of a sudden downshift and/or hefty downward revisions is heavy
Ian Shepherdson (Chief Economist and Founder)U.S.
Wild, but a Fed pause is still a good bet, just
Kieran Clancy (U.S. Economist)U.S.
- Downside risk for May payrolls, but these data are wild and forecast margins of error are huge.
- Expect a benign hourly wage print; the April spike likely was noise rather than signal.
- The ISM survey shows manufacturing firmly in recession, and signals a deep inventory correction.
Ian Shepherdson (Chief Economist and Founder)U.S.
A second straight upside surprise, but no clear signal for payrolls
Kieran Clancy (U.S. Economist)U.S.
- We expect a clear slowing in ADP employment in May, but we care more about NFIB hiring intentions.
- Weak regional surveys and soft China PMIs point to a dip in ISM manufacturing; the sector is in recession.
- Auto sales likely dipped in May; the trend appears to be peaking as rates rocket and credit tightens.
Ian Shepherdson (Chief Economist and Founder)U.S.
Yet another grim manufacturing survey.
Kieran Clancy (U.S. Economist)U.S.
Still deteriorating, but at a less rapid pace.
Kieran Clancy (U.S. Economist)U.S.
