- Businesses’ capex plans appear to be starting to rebound, but how much damage has been done?
- Cheaper gas likely is cheering consumers, and reducing their inflation expectations.
- New home sales probably fell again in August, and prices probably are falling, given very high inventory.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Aggressive rate hikes will continue until inflation improves; 75bp in November, but 25bp in December?
- Fed opinion is split, even in the near-term, and the inflation data over the next few months will be better.
- The Homebase data suggest a preliminary 325K forecast for September payrolls.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Housing construction is trending rapidly downwards, but starts likely were steady in August...temporarily.
- Inflation expectations are tracking the decline in food and energy inflation; that’s what matters for the Fed.
- Used vehicle prices fell sharply in the first half of September; the data will hit the CPI very soon.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Huge uncertainty over foreign trade and inventories mean Q3 GDP growth is still a wild card.
- We see substantial net upside risk, but other models point in the opposite direction.
- Homebuilders’ sentiment likely has not yet bottomed; mortgage demand is still falling.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Core PPI inflation is falling fast, despite upward pressure from a technical issue in August.
- Core retail sales likely rose at a decent pace in August, though the margin of error is bigger than usual.
- A calendar quirk probably will constrain reported manufacturing output in August.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Our 2023 base case is that inflation will surprise to the downside, but growth will surprise to the upside…
- …Under those conditions, the Fed will not be easing next year; continued gradual hikes are more likely.
- Rising r-star in the face of sustained economic growth is nothing for real assets to fear
Ian Shepherdson (Chief Economist and Founder)U.S.
- The Fed finally has started to talk about the impact of margins on inflation, after months of baffling silence.
- Vice-Chair Brainard says wider margins drove up inflation; a reversal could drive it back down.
- Jobless claims hit a three-month low; the feared summer surge in layoffs did not happen.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Consumers’ discretionary spending is reviving in the wake of the plunge in gas prices.
- The ISM and PMI services indexes are headed in opposite directions; one of them is wrong.
- The July trade data will confirm that the deficit is falling fast; trade will be a big plus for Q3 GDP growth.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The Homebase data point to another solid payroll gain, but the August seasonal is a wild card.
- Wage growth appears to be picking up slightly, but we need more data to be sure.
- The ISM has stabilized, and the supply-chain measures point to much lower inflation.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Rising vehicle production will feed through into higher sales, but August looks to have been too soon.
- The manufacturing sector likely slowed again in August, but it is not rolling over.
- ADP’s new payroll methodology is an improvement, but the errors are still large and volatile.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The ADP employment report returns today, with new methodology; forecasts are, therefore, a joke.
- The number of JOLTS job openings remains close to the peak, but are the data believable?
- Consumer confidence is rebounding as falling gas prices boost people’s spending power.
Ian Shepherdson (Chief Economist and Founder)U.S.
The August inflation data will have to be great if the Fed is to pivot to 50bp in September...
...Whatever happens to rates in the near-term, the Fed is uneasy at market forecasts of lower rates in 2023.
The plunging trade deficit and stronger consumption mean Q3 GDP forecasts are much too low.
Ian Shepherdson (Chief Economist and Founder)U.S.
Net trade set to make a hefty contribution to Q3 GDP growth
Ian Shepherdson (Chief Economist and Founder)U.S.
Real incomes up, spending up, core prices slowing
Ian Shepherdson (Chief Economist and Founder)U.S.
Key regional surveys now show that supply conditions have improved enough to push down margins.
The upturn in jobless claims since the spring is overstated by seasonal problems; the labor market is fine.
Capital goods orders are rising at a decent, steady pace, but inflation is offsetting the gains, for now.
Ian Shepherdson (Chief Economist and Founder)U.S.
Chair Powell likely will reiterate that the Fed is now data-dependent; 75bp is not certain for September.
Student loan forgiveness will not materially boost growth or inflation, or threaten the public finances.
Imports appear to be falling quite quickly; a drop in the trade deficit will boost Q3 GDP growth.
Ian Shepherdson (Chief Economist and Founder)U.S.
Business lending standards are tightening, but credit growth is still strong, for now.
Plunging new home sales are dragging down prices, and hurting service sector activity surveys.
Upside risk for July durable goods orders today, but the housing collapse is worsening by the month.
Ian Shepherdson (Chief Economist and Founder)U.S.
Used vehicle prices fell sharply in the first half of Au- gust, as inventory exceeded its 2019 level...
Prices will fall much further as production rebounds, driving down dealers’ margins, and core inflation.
The hotel recovery has lost steam since gas prices soared, but fall and holiday travel likely will be busy.
Ian Shepherdson (Chief Economist and Founder)U.S.
The drop in home sales will depress spending on housing-related items, but they’re only 3% of GDP.
The rebound in the Philly Fed contradicts the plunge in the Empire State index; regional surveys are noisy.
The upward trend in jobless claims has slowed, and they remain extremely low.
Ian Shepherdson (Chief Economist and Founder)U.S.
