- 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
- 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
- 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
- Core PCE inflation is fading rapidly; in recent months it has run only just above 2% on a sequential basis.
- Consumption spending slowed at the start of Q4, but likely is on course to rise at a 2%-plus rate.
- Look for only a modest bounce in the ISM manufacturing index, despite the leap in the Chicago PMI.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The October PCE data likely will confirm that core disinflation continues, but still has a way to go.
- Spending growth appears to have moderated, though one softer month proves nothing.
- Jobless claims likely rebounded last week, though the Thanksgiving seasonals are tricky.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Treat everything you read about holiday spending with great skepticism; reliable data don’t exist.
- Even the official retail sales numbers can’t be trusted until after at least one round of revisions.
- The trade deficit was wild during and immediately after Covid, but it’s much calmer now.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Gas and stock prices have an outsized influence on consumers’ confidence indexes, politics matters too.
- The expectations subindexes historically have been a decent guide to real consumption spending.
- Monthly swings in new home sales are mostly noise, but the trend is now flattening.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Business CapEx looks to have stalled at the start of Q4, hit by rates and tight credit conditions.
- Equipment spending is on course to fall for a second straight quarter, with only modest gains elsewhere.
- Jobless claims surprised to the downside last week, but we expect a rebound in this week’s report.
Ian Shepherdson (Chief Economist, Chairman and Founder)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 FED IS DONE, AND WILL START EASING IN SPRING...
- ...BUT THE FOMC WON’T ABANDON OPTIONALITY JUST YET
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 supply-side factors we wanted to see in order to push inflation back down have all now normalized…
- Excess demand is the last piece of the jigsaw; the lagged hit from the Fed’s hike will take care of it.
- As demand moderates, gross margins will fall, pushing inflation back to target, and perhaps below it.
Ian Shepherdson (Chief Economist, Chairman and Founder)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 (almost) final nail in the coffin of the Fed's rate hike optionality
Ian Shepherdson (Chief Economist, Chairman and Founder)US