Don't be fooled by the February bounce; a sustained recovery in housing construction is still a long way off.
Kieran Clancy (U.S. Economist)U.S.
Housing starts close to a floor; conflicting signals from the regional Fed surveys
Kieran Clancy (U.S. Economist)U.S.
Building permits will find a floor in the first quarter
Kieran Clancy (U.S. Economist)U.S.
Meaningful rebound in construction activity still a long way off
Kieran Clancy (U.S. Economist)U.S.
The bulk of the drop is over, but recovery is a long way off
Kieran Clancy (U.S. Economist)U.S.
- Job growth is slowing, on track to slip below 100K by next March, pushing up unemployment.
- Wage growth appears to be softening, though the data are not quite definitive, yet.
- If recent trends continue, and core CPI prints moder- ate, Chair Powell’s stance will have to change.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Chair Powell wants slower growth, better core inflation, and a looser labor market before the Fed pivots...
- ...Those criteria have not yet been met, despite better pipeline inflation, so expect no change in tone today.
- We now expect a 175K increase in October payrolls; a slowdown, but not a rollover.
Ian Shepherdson (Chief Economist and Founder)U.S.
Ignore the uptick in permits; the downturn in housing starts has much further to run
Ian Shepherdson (Chief Economist and Founder)U.S.
- 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.
- Even if margin re-compression crushes inflation over the next year, wages pose a medium-term threat...
- ...That’s why the Fed is so determined to drive a weakening in the labor market.
- But policymakers’s fears of sustained wage-driven inflation likely overstate the danger.
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.
- The Fed likely will hike by 75bp today, and will forecast a further 100bp by the end of the year...
- ...They will forecast slower growth, higher unemployment, and lower inflation for next year
- Existing home sales likely dipped only slightly in August, but further hefty declines are coming.
Ian Shepherdson (Chief Economist and Founder)U.S.
Ignore the jump in starts, the plunge in permits is what counts
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.
- CPI rent inflation has exploded, but the monthly run-rate likely has peaked.
- Landlords' rent expectations have moderated; tenants' ability to pay is more limited.
- Chair Powell will stick to the script today, again.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Job growth likely is slowing, but it is still too strong for the Fed, and wage gains are too fast too...
- Participation appears still to be rising, but it’s not yet high enough to cap wage growth.
- The services PMI points to downside risk for ISM services; housing is hurting both surveys.
Ian Shepherdson (Chief Economist and Founder)U.S.
Ignore the increase in the Case-Shiller existing home price index today; it is out of date...
...Prices are falling as soaring supply meets plunging demand; a new equilibrium is some way off.
Consumers’ confidence is picking up as gas prices fall, but does it tell us anything about spending?
Ian Shepherdson (Chief Economist and Founder)U.S.
