- February’s subdued core PCE price data support the idea that January’s spike was a one-time fluke.
- Consumption is on track for a 2% gain in Q1, down from 3.3% in Q4, and real income growth is slowing
- A modest uptick in ISM manufacturing is a decent bet, but the sector remains weak.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
ACTIVITY IS STRUGGLING AND DISINFLATION IS CONTINUING…
- …ENABLING CENTRAL BANKS TO PURSUE FURTHER RATE CUTS
Andrés Abadía (Chief LatAm Economist)Latin America
- Expect a 0.3% core PCE, but surprises are possible; it’s impossible to replicate all the BEA’s methods.
- Quarterly real consumption growth looks on course for a meaningful slowdown in Q1.
- Governor Waller is in no rush to ease, but he is ignoring clear warning signs in the labor market numbers.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Easter data distortions ahead; lower claims numbers today will likely reflect tricky seasonal adjustment.
- Core durable goods orders are very likely to drop when Easter is in March, then rebound in April.
- We expect a pick-up in the March Chicago PMI, and look out for revisions to the Michigan sentiment data.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- U.S. - Manufacturing output is stabilising, but a real rebound remains distant
- EUROZONE - How will the ECB deal with inflationary fiscal tightening?
- U.K. - How fast and how far can the MPC cut interest rates?
- CHINA+ - Japan’s wage-price spiral still in its infancy; BoJ admits it moved early
- EM ASIA - CBC hikes to nip the impact of higher electricity tariffs in the bud
- LATAM - Banxico finally joins the LatAm easing party, but with caution
Ian Shepherdson (Chief Economist, Chairman and Founder)Global
THE LABOR MARKET IS ABOUT TO SLOW, SHARPLY…
- …THE FED WILL RESPOND, BUT WHEN?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Low income households now have a much smaller stock of real liquid assets than before Covid…
- The shortage of cash will crimp spending and push up delinquency rates on consumer credit instruments.
- Falling capex shipments point to an outright decline in Q1 equipment investment; Q2 perhaps a bit better?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Brazilian inflation overshot in March due to elevated food prices, yet core pressures are stable.
- We expect disinflation to gather momentum in Q2 as weather conditions ameliorate.
- The COPOM meeting minutes hint at further rate reductions of 50bp in May and possibly June.
Andrés Abadía (Chief LatAm Economist)Latin America
- Core durable goods orders likely remained weak in February, despite mild weather.
- Equipment investment likely rose in Q1 due to a rebound in heavy truck sales, but a full-year drop is still a solid bet.
- The Conference Board’s confidence index likely is still consistent with steady spending growth in March.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Colombia’s BanRep ramped up the easing pace to 50bp, taking rates to a still-eye-watering 12.25%.
- The March decision was a divided vote, with future rate cuts expected to be data-dependent.
- BanRep will have some flexibility, given lower inflation, better external conditions and weak GDP.
Andrés Abadía (Chief LatAm Economist)Latin America
- In one line: Poor economic activity will put a lid on inflation.
Andrés Abadía (Chief LatAm Economist)Global
- The March Philly Fed and S&P surveys suggest the manufacturing sector’s downturn is over...
- ...But ongoing inventory rundowns and depressed global demand point to only modest growth ahead.
- New home sales likely rose for a third straight month in February; homebuilders will hang on to market share.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The improving inflationary outlook has allowed Banxico to start an easing cycle, by 25bp to 11.00%.
- The forward guidance continues to indicate the potential for further cuts, depending on the data.
- The room for policy easing at the next meetings remains wide open, as inflation will continue to fall.
Andrés Abadía (Chief LatAm Economist)Latin America
Manufacturers are past the worst, but claims will rise this spring.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- In one line: The Board exercises caution, as forward guidance is limited to one meeting.
Andrés Abadía (Chief LatAm Economist)Latin America
- In one line: A poor start to the year, but conditions will improve soon.
Andrés Abadía (Chief LatAm Economist)Latin America
- In one line: The Board exercises caution, as forward guidance is limited to one meeting.
Andrés Abadía (Chief LatAm Economist)Global
- Both federal and state/local government are set to make much smaller contributions to growth this year.
- S&L government housing construction will slow, and the surge in payrolls will moderate, likely quite soon.
- February’s jump in existing homes sales will not be sustained; mortgage demand remains very weak.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Brazil’s COPOM voted unanimously to cut the Selic rate by 50bp, as expected, but has exercised caution.
- The forward guidance has been limited to one meeting ahead, due to increased uncertainty.
- A further 50bp rate cut in May is likely, with subsequent decisions contingent on the data.
Andrés Abadía (Chief LatAm Economist)Latin America
