- The FOMC stuck to its December forecast of 75bp easing this year; recent inflation data just a “bump”.
- Chair Powell sees no “cracks” in the labor market; the NFIB and WARN data tell a different story.
- Today’s existing home sales data are wild, but whatever they show, a real recovery is some way off.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The FOMC likely will stick to its December forecast of 75bp easing this year.
- FOMC members’ inflation forecasts probably will be little changed, despite recent data disappointment.
- Homebuilders are gaining market share, keeping single-family construction on an upward track.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Homebase points to solid March job growth, but likely slower than in February…
- Either way, the outlook for the second quarter is materially weaker; hirings down, firings up.
- Housing construction is set to rise as homebuilders gain market share; is the multi-family slump over?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The January and February retail sales numbers signal a sharp slowdown in consumption in Q1.
- Core PPI inflation has flattened recently, but weaker consumption will drag down margins later this year.
- Expect a rebound in February manufacturing output, but it will mostly be a weather-related story.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- February retail sales likely rebounded after January’s weather hit, but look out for revisions
- Downside risk for February’s core PPI, but the data are much noisier than the CPI numbers.
- Jobless claims are still tracking sideways, but an array of indicators points to a clear increase in the spring.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- February’s core CPI was less bad than January’s, but unhelpful to the case for an early Fed rate cut.
- Nothing is yet definitive, given how much inflation and labor market data will appear before the May FOMC.
- Small firms are much less cheerful than implied by the stock rally, and they are hiring many fewer people.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- All eyes on OER today; the most likely outcome is a significantly smaller increase than in January.
- Core services prices ex-rent likely rose much less quickly in February too, allowing the Fed to breathe.
- Small business sentiment usually rises when stocks do well; are credit conditions finally biting?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Falling hiring plans and rising layoff fears signal a substantial slowdown in spring payroll growth.
- Cyclical job growth is likely to grind to a halt, or worse, leaving only demographics boosting employment.
- ISM manufacturing still stuck in a depressed range, but a modest spring revival is still a decent bet.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Nothing new from Chair Powell; the Fed will ease once they’re happy inflation will keep falling.
- Ignore ADP and the JOLTS job openings numbers; the further dip in the quits rate is all that matters.
- Initial jobless claims were likely flat last week, but leading indicators point to an upturn ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Chair Powell will stick to the Fed’s core message; they are waiting for more good inflation data.
- Ignore ADP and the JOLTS job openings numbers; the quits rate is all that matters.
- February’s ISM services report points to lower inflation, and a softening labour market and activity...
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The ISM services index likely fell in February, but the headline is a poor guide to growth in activity.
- The prices paid index surged in January, leading to fears about a renewed rise in services inflation...
- ...But it is a volatile measure which often misleads; more reliable indicators point to lower inflation.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- January’s jump in the core PCE deflator is noise, not signal; fundamental disinflationary forces are strong.
- February likely saw the third straight uptick in the ISM manufacturing index, but it remains depressed.
- Auto sales likely rebounded only partially last month after their January slump, and the trend is falling.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- OER redux: The unexpected January spike likely—but not definitely—will persist for five more months.
- Pending home sales likely dropped in January as favorable weather effects from December reversed.
- The Chicago PMI likely rebounded this month, but single regional surveys are unreliable.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Our core PCE forecast for January is below the consensus, but only just, and this is not an exact science.
- January headline durable goods orders will be depressed by Boeing, did snow hit the core?
- Consumers’ confidence likely rose again this month, but spending growth nonetheless is set to slow.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Business investment last year was hugely flattered by the impact of the CHIPS Act, but that’s now fading.
- Other capex looks to be constrained by high rates and tight credit, especially for small firms.
- Existing home sales are off the floor, but a full recovery is a long way off.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The January FOMC minutes reinforce Chair Powell’s message: They are going to wait for more data.
- Don’t be deceived by falling February mortgage applications; the seasonals are hopeless.
- An array of indicators points to rising jobless claims, but not just yet.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Homebase data point to a sharp slowdown in February payrolls; we expect 125K, with 75K private jobs.
- Spikes in the payroll numbers are common; what matters is whether they are sustained.
- The FOMC minutes will reaffirm the message that policymakers are happy to delay the first easing.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Severe weather likely hurt January retail sales; a partial rebound is a good bet for February.
- The soft start to the quarter means we now expect 2% growth in real Q1 spending; decent, but a slowdown.
- Core PPI inflation probably is still falling, but margins—trade services—are wild month-to-month.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Core retail sales likely rose again in January, getting Q1 consumption off to a decent start.
- Manufacturing output, by contrast, probably tanked, but it probably will recover this month.
- Seaonals point to higher jobless claims today, but the real story is the deterioration in the leading indicators.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- January’s core CPI was hit by spikes in OER, hospital costs, and an array of other service components...
- ...But none of these factors are likely to persist, and the trend in core inflation will keep falling.
- Small firms squeezed by tight credit and higher rates; are rising layoffs and reduced hiring imminent?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
