More disappointment, but no change in the trend or the fundamentals
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
- Decent January core CPI is likely, but wild cards will make the difference between 0.2% and 0.3%.
- Whatever happened last month, all the signs we follow point to a sustained drop in inflation ahead.
- NFIB members like a rising stock market, but the details of the January survey will be weaker.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The CBO projects a substantial drop in the federal budget deficit this year; a headwind to growth.
- With households likely to slow the rundown of their pandemic savings too, weaker growth is a good bet.
- The annual CPI revisions were modest, and leave the clear downward trend in place.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The annual revisions to the CPI today are a black box, but they are unlikely to change the big picture.
- Core disinflation will persist, regardless of changes made to the data for last year.
- The Atlanta Fed wage tracker strongly suggests that the spike in January AHE is noise, not signal.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The recent past is not always a good guide to the near future, especially in the labor market.
- Rising layoff announcements and weakening hiring intentions signal slower payroll growth in the spring.
- Huge residual seasonality will push down mortgage applications this month, but the trend is rising.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The weakness of the household employment measure probably is not significant…
- …It’s a vastly inferior measure of short-term labor market trends than payrolls—and they’re not great.
- Consumer credit growth likely plunged sharply in December, after November’s inexplicable leap.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Growth in bank lending to businesses is grinding to a halt; the SLOOS survey signals continued weakness.
- The jump in ISM services prices will matter only if it is sustained; brief swings usually are just noise.
- The sharp drop in unit auto sales in January means total retail sales likely were little changed.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Head-scratching numbers kill March stone dead, and threaten May too
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Whatever really happened to payrolls in January, leading indicators point to much slower gains in Q2.
- The spike in hourly earnings likely reflects the mis-measurement of hours, not a rebound in the trend.
- The January data have killed any chance of a March Fed easing, but we still expect the first cut in May.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
