- The annual revisions to the CPI today are a black box, but they are unlikely to change the big picture.
- Core disinflation will persist, regardless of changes made to the data for last year.
- The Atlanta Fed wage tracker strongly suggests that the spike in January AHE is noise, not signal.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The recent past is not always a good guide to the near future, especially in the labor market.
- Rising layoff announcements and weakening hiring intentions signal slower payroll growth in the spring.
- Huge residual seasonality will push down mortgage applications this month, but the trend is rising.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The weakness of the household employment measure probably is not significant…
- …It’s a vastly inferior measure of short-term labor market trends than payrolls—and they’re not great.
- Consumer credit growth likely plunged sharply in December, after November’s inexplicable leap.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Growth in bank lending to businesses is grinding to a halt; the SLOOS survey signals continued weakness.
- The jump in ISM services prices will matter only if it is sustained; brief swings usually are just noise.
- The sharp drop in unit auto sales in January means total retail sales likely were little changed.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Head-scratching numbers kill March stone dead, and threaten May too
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We think total payrolls rose by about 225K in January, comprising 175K private and 50K government.
- Similar gains are likely through the end of Q1, but we expect a meaningful slowing in job gains in Q2.
- Don’t worry about the jump in ISM prices paid; it’s an unreliable guide to CPI core goods prices.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Fed wants to see confirmation of its base-case forecast that inflation is headed to target…
- …If the data before March are favorable, the first ratecut will come at that meeting, but no guarantees.
- The ISM manufacturing survey likely will show that the industrial economy is still in a hole.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Fed probably will abandon the idea of further hikes today, but won’t commit to easing timing.
- The Q4 employment costs index today is key; a further slowing would make a March easing more likely.
- The jump in December job openings is noise; the falling quits rate is much more important.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We’re much more interested in the JOLTS quits rate than the headline job openings number…
- …Surging quits warned of the 21-to-22 jump in wage gains; the signal now is to the downside.
- Soaring stocks and cheaper gas are boosting consumers’ sentiment; will spending follow?
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Core inflation falling steadily across all three components.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Inflation matters more than the GDP overshoot, and it looks great.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The excellent Q4 inflation numbers are much more important than the overshoot in Q4 GDP growth.
- The core PCE deflator likely rose 0.2% in December, but 0.1% is much more likely than 0.3%.
- Pending home sales probably rebounded strongly in December, with further gains ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see downside risks for Q4 GDP growth, but the uncertainties over inventories and trade are great.
- The core PCE deflator likely rose at a 2.0% annualized rate for the second straight quarter.
- December’s durable goods orders likely flattered by aircraft; new home sales probably rebounded.
Ian Shepherdson (Chief Economist, Chairman and Founder)US