The April core CPI was lifted by a huge leap in airline fares; vehicle prices were disappointingly strong too…
…But the downshift in core-core price gains continued, and it has further to go as wage increases slow.
Inflation is likely to end the year higher than we previously thought, but the trend will be clearly falling.
Ian Shepherdson (Chief Economist and Founder)U.S.
The manufacturing sector is feeling the weight of China’s slowdown; the ISM is set to fall further.
Manufacturing is not GDP, but—like housing—it is has an outsized impact on perceptions of the economy.
The number of job openings has peaked, likely be- cause rapid hiring has reduced the Covid backlog.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Headline and core inflation will peak in March; the key question now is the speed of the subsequent drop.
- The Fed needs to see falling vehicle prices, slower wage gains and improving supply chains.
- These are all reasonable bets, but they aren't certain in terms of both timing and extent.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Chair Powell sticks to the tightening story, while ac-knowledging uncertainty due to the Ukraine war.
- The unwinding of the Omicron hit should mean lower claims and stronger ISM services today.
- The auto sales rebound is stalling, but Q1 sales still on course to rise by more than 40%, annualized.
Ian Shepherdson (Chief Economist and Founder)U.S.
In one line: Import flood continues; auto inventory still rising, but less quickly.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Key U.S. market metrics are now marginally better than immediately before Russia invaded Ukraine...
- ...Oil prices, particular, priced-in the invasion, so retail gas prices will now stabilize.
- First quarter GDP growth looks set to be lower than we hoped, thanks to continued auto supply problems.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The FOMC is divided on the pace and timing of the coming policy tightening.
- The huge rebound in January retail sales will lift Q1 growth forecasts, but uncertainty still rules.
- Housing demand is softening, pushing down the leading components in the NAHB survey.
Ian Shepherdson (Chief Economist and Founder)U.S.
- A gratifyingly huge leap in auto sales likely will flatter today's headline January retail sales...
- The core will be mixed, but we hope falling restaurant sales were offset by gains elsewhere.
- A weather-driven leap in utility output likely will hide soft January manufacturing data.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The ISM index likely dipped in January, but a big Omicron hit seems to have been averted.
- The construction recovery has been driven entirely by housing, but the story is changing…
- …Industrial and commercial construction is rebounding strongly, but housing activity is set to drop.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The downshift in quarterly ECI wage growth reduces the risk that the Fed has to slam on the brakes...
- ...But a further softening is needed, on the back of rising participation, to make policymakers comfortable.
- The apparent leap in January auto sales, if sustained, reduces the risk of zero GDP growth in Q1.
Ian Shepherdson (Chief Economist and Founder)U.S.
- CPI inflation will peak in the next few months, but the speed of the coming downshift is unclear.
- China's PPI inflation is now falling and has further to go; the U.S. will follow soon.
- Seasonal adjustment issues likely pushed jobless claims up again last week, but the trend is falling.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Covid cases still rocketing, but they likely will peak over the next couple weeks.
- The economic hit will be smaller and briefer than during the Delta wave, but it will be visible nonetheless.
- The December ISM survey likely will show that supply-chain pressures are easing, gradually
Ian Shepherdson (Chief Economist and Founder)U.S.
- Threats to rents, vehicle prices, airline fares and hotel room rates mean upside core CPI risk today.
- The next few months will see core inflation rise towards 7%; the Fed's pivot is a pre-emptive strike.
- It's still reasonable to expect inflation to fall very sharply next year, but the Fed can't be certain.
Ian Shepherdson (Chief Economist and Founder)U.S.
- ADP's November employment number likely will be boosted by the fading drag from the Delta variant.
- Chair Powell has retired "transitory", and kicked open the door to faster tapering, Omicron permitting.
- The November ISM likely will signal a modest easing in supply pressures; auto sales up again?
Ian Shepherdson (Chief Economist and Founder)U.S.
- Core retail sales are rising at a solid pace; a strong holiday season is a decent bet...
- ...But a sustained rebound in spending on services is still the missing link in the recovery story.
- Mortgage demand continues to rise steadily; home sales and housing construction follow.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The initial Homebase jobs data for the November payroll survey week look disconcertingly soft...
- ...But the data always are revised up, and the revisions are consistent; we look for 800K private jobs.
- October retail sales and industrial production num- bers today likely will confirm a solid start to Q4.
Ian Shepherdson (Chief Economist and Founder)U.S.
- If the Fed's transitory view is to be proved correct, wage growth has to slow, so participation has to rise.
- Productivity growth has to rise too, and global supply chain pressures have to fade.
- These are all reasonable bets, but nothing is certain, and inflation will rise much further in the near-term.
Ian Shepherdson (Chief Economist and Founder)U.S.
- October's leap in the core CPI will be followed by a run of further hefty increases...
- ...Core inflation is likely to blast through 6% early next year, posing a serious challenge to the Fed.
- Chair Powell wants to stick to "transitory", but he needs to see labor participation surging, and fast.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The October core CPI likely rebounded after a run of benign readings, but the uncertainty is great...
- Used auto prices, airline fares, and rents all pose clear upside risk, but nothing is certain.
- The unexpected plunge in PPI new vehicles prices in October likely is a technicality rather than a real shift.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The tapering announcement today is a done deal; what Chair Powell says about inflation matters more.
- Expect a defense of the transitory arguments, but with a warning of hefty near-term upside risk.
- Homebase data point to a third straight disappointing payroll print, thanks to the Delta Covid wave.
Ian Shepherdson (Chief Economist and Founder)U.S.
