- Our Homebase model points to an initial estimate of a subpar 150K rise in private payrolls in May.
- The Redbook measure of year-over-year growth in retail sales has been remarkably strong lately...
- ...But it has often overstated the trend in the official retail sales data in the recent past; we think it is again.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Not definitive, but consistent with the idea that the trend is starting to rise.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The manufacturing sector continues to disappoint and a sustained recovery still looks some way off.
- April's pick-up in import prices likely will have a near-zero impact on core goods CPI inflation.
- The failure of housing starts and claims fully to reverse recent adverse shifts suggest interest rates are too high.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
A broad-based slowdown, pointing to a 0.24% core PCE print.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Underlying services inflation slowed in April; momentum in rents and auto insurance prices will fade.
- The CPI and PPI data suggest the core PCE deflator rose by 0.23%, the smallest increase since December.
- April's retail sales report supports the case for a slowdown in consumption growth.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We are merely nudging up our forecast for the April core CPI to 0.37%, from 0.35%, following the PPI data.
- Short-term movements in many equivalent PPI and CPI components are weakly correlated.
- We also look today for a 0.4% rise in total retail sales, consistent with near-zero real consumption growth.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The consensus forecast for a 0.2% rise in the April core PPI is well-grounded, but big surprises are common.
- Tight credit is weighing heavily on small businesses; we expect another dip in the NFIB survey in April.
- NY Fed data suggest consumers are becoming more worried about job losses, pointing to higher layoffs.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
One big jump is not a trend, but a rising trend is now due
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Jobless claims likely will drop this week, but the sudden spike week is a warning sign of trouble ahead.
- Consumers’ confidence likely has peaked, but changes to the Michigan survey will overstate any softening.
- The new method likely will lift the survey's five-to-10-year inflation expectations measure, slightly.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see a sharp downturn in payrolls soon, despite the rock-bottom level of initial jobless claims.
- Claims tend to lead payrolls during an upturn, but deteriorate alongside payrolls during a downturn.
- Revisions to payrolls are uncorrelated with the initial response rate; April's weak initial print will survive.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- CPI health insurance prices are set to slow sharply from April, thanks to methodological changes.
- Prices should flatline from April to September, but the 1½% trend in the PCE measure will continue.
- MBS data on mortgage applications likely nudged up last week, but from a very low base.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Banks are continuing to tighten credit availability for business and consumers.
- The real cost of bank loans to small businesses is approaching 8%; no wonder they are cutting costs.
- The lag between banks' willingness to extend consumer credit and lending flows is long; a slowdown lies ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Both the Homebase data and the NFIB survey signal slower job growth in April, but the numbers are noisy.
- One softer print would not trigger a Fed response, but it would make the May number critical for markets.
- The ISM services survey likely will provide further reassurance on the underlying inflation outlook.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Chair Powell batted away talk of a further rate hike, and hinted that labor market fears are emerging.
- Everything will change if payroll growth slows sharply; that won't happen overnight, but it is coming.
- Still no signs of a real manufacturing recovery, and inflation risks from the sector are minimal.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The FOMC will likely take a hard line on easing today, despite abundant warnings of a weaker labor market.
- The disappointing Q1 ECI is not definitive; leading indicators signal downward pressure on wage growth.
- Ignore the ADP and JOLTS job openings today; the JOLTS quits rate matters far more.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Year-over-year growth in the ECI likely fell below 4% in Q1, almost back to its inflation target-consistent rate.
- California fast food price rises driven by the minimum wage hike will have a microscopic impact on the CPI.
- Ignore the 3.9% Q2 growth forecast from GDPNow; its estimates are often way off this early in the quarter.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Q1 data suggest upside risk to our 0.28% March core PCE forecast, but 0.3% rounded still looks likely.
- Q1 GDP growth was better beneath the hood; the headline was hit by a big foreign trade drag...
- ...But expect drags in Q2 from inventories and residential investment, as well as slowing consumption growth.
Ian Shepherdson (Chief Economist, Chairman and Founder)US