- A third straight benign core CPI print for December would complete the best streak in two years.
- Look out for falling vehicle prices and airline fares, and—perhaps—slower rent increases.
- Jobless claims likely stayed low last week, but rising layoff announcement signal trouble ahead.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Our base case remains that inflation will be van- quished without a recession...
- ...But the Fed’s determination to take zero inflation risk makes the balancing act much more difficult.
- Core inflation is now falling, but the Fed wants wage growth to moderate; leading indicators are favorable.
Ian Shepherdson (Chief Economist and Founder)U.S.
The Homebase small business employment data point to a 250K increase in October payrolls...
...But whatever happened in October, job growth will slow markedly over the next few months.
A fourth straight modest hourly earnings number would strongly suggest the trend is slowing.
Ian Shepherdson (Chief Economist and Founder)U.S.
ADP’s employment measure is unreliable; we will be sticking to our 250K payroll forecast.
Job openings are trending downwards but not collapsing; wage growth is slowing more quickly.
The October trade deficit likely fell slightly, but the big correction in imports is over.
Ian Shepherdson (Chief Economist and Founder)U.S.
Chain store sales growth is slowing; adverse base effects are only part of the story...
...Discount stores appear to be suffering as low- income households are squeezed.
Home prices are falling, probably at an accelerating rate, and consumers are glum.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Layoff announcements are not a reliable guide to jobless claims in the short term...
- ...But we cannot ignore the upward trend in recent months; claims likely will follow.
- Regional Fed surveys point to a sharp slowdown in capital spending, but it is not in the hard data yet.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Forecasts of GDP growth over 4% in Q4 might be right, but at this point they are premature.
- Existing home sales likely fell again in October but can’t drop much further; prices can.
- Used vehicle auction prices nudged up in early November; we hope it’s noise, not signal.
Ian Shepherdson (Chief Economist and Founder)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.
- We look for a 175K increase in October payrolls, but the margin of error is large at inflexion points...
- ...Employment measures in most business surveys have weakened, but they remain quite strong.
- Look out for a third straight soft hourly earnings print; that would start to look like a trend.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The plunge in job openings was the biggest surprise in the August data; what happened in September?
- The ISM manufacturing index likely fell again in October, but it remains well above recession levels.
- Auto sales appear to have rebounded very strongly in October as supply continued to improve.
Ian Shepherdson (Chief Economist and Founder)U.S.
- If core inflation and wage growth slow simultaneously, the Fed’s last hike will be in December
- Don’t be deceived by low and stable initial claims; labor demand is slowing markedly.
- The latest core CPI prints are grim, but recency bias is dangerous; change is coming, for the better
Ian Shepherdson (Chief Economist and Founder)U.S.
- Q3 GDP growth flattered to deceive; domestic final demand barely rose.
- The Q3 ECI should offer a bit of hope on the wages front, but the numbers are hard to forecast.
- One monthly drop in core capex orders proves nothing, but weaker business surveys are ominous.
Ian Shepherdson (Chief Economist and Founder)U.S.
- We see upside risk for third quarter GDP growth; net trade likely drove growth to 3.1%.
- Demand for labor is slowing, despite very low and stable initial jobless claims.
- September durable goods orders likely boosted by aircraft, but core capex looks solid too, for now.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The drop in productivity across the past three quarters is a reversal of the initial Covid-driven surge…
- …The trend in productivity is not falling; expect a rebound to begin in Q3.
- Positive productivity growth and slowing wage gains next year will allow the Fed to stop hiking, then ease.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Markets overreacted to an insignificant dip in unem- ployment because the Fed overreacts to the data too.
- The slowing in job growth has been very gradual in recent months, but friendly seasonals can’t last.
- The slowing in wage gains still looks more like a sta- tistical quirk than a trend, but October data are key.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The sudden and dramatic plunge in the August job openings will move the Fed, if it persists...
- ...Similar reports for the next two months make 125bp of tightening by year-end very unlikely.
- The ISM services index likely dipped in September; the housing collapse and falling stock prices hurt.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The very healthy state of the private sector’s finances stands between financial conditions and recession…
- …No one knows how far people will run down their savings, but they start with a gigantic pile of cash.
- If recession comes, it will be brief, and mild; without severe imbalances, recessions can’t be severe either.
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.
