- Rent rises for new tenants have slowed sharply; the feared catch-up in CPI rent inflation is unlikely.
- We expect annualized CPI housing inflation to slow to 3-to-4% over the next few quarters.
- Q2 consumption is on course for a modest 2%, similar to Q1, after May's lacklustre retail sales data.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Our Homebase model points to a mere 125K rise in private payrolls in June, the least since October.
- Retail sales likely recovered in May from a subpar April, but the trend looks less robust.
- Industrial production likely picked up in May; surveys have nudged up and hours worked have risen.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The CPI and PPI data imply that the core PCE deflator rose by just 0.11% in May…
- …Below the 0.19% average run rate forecast by the Fed; September’s SEP update will support a rate cut.
- The Michigan sentiment index probably bounced this month, but job loss worries seem to be mounting.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Fed’s hawkish dotplot is likely to have a short shelf life; the data will force faster easing than they expect.
- The May core CPI slowdown was deep-rooted; we expect just 0.20% average gains through year-end.
- CPI data signal a 0.16% rise in the core PCE deflator, but we will finalize our estimate after today’s PPI.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The high core PCE prints in Q1 will force the Fed to revise up its Q4 forecast, and cut one easing.
- A jump in used car and vehicle insurance prices probably drove a 0.3% increase in the May core CPI...
- ...But core services CPI inflation likely slowed further, indicating monetary policy is tight enough.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The NY Fed survey shows wage growth and long-run inflation expectations are in line with the 2010s.
- People plan to spend 5% more over the next year, but expectations correlate poorly with actual spending.
- Tight credit conditions are weighing heavily on small firms, an ominous sign for the economy at large.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The Homebase data were revised as we expected, so we are sticking with our 180K May payroll forecast.
- Rising jobless claims and the NFIB’s very weak hiring intentions index signal soft summer payrolls.
- We look for a 0.3% rise in average hourly earnings; a calendar quirk points to slight upside risk.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We expect EURUSD to weaken by 8% to 1.18 by year-end, as the Fed eases faster than the ECB.
- Initial claims likely rose last week; public holidays depress them less now than seasonal adjustment assumes.
- The ISM services index is an unreliable guide to activity, but a weak employment balance points to trouble ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The drop in the Atlanta Fed Q2 GDPNow estimate says very little; it's still far more model than tracking.
- April's JOLTS report brings further signs of labor market normalization. Lower wage growth is likely to follow.
- ADP's data and the employment index of the ISM services survey are hopeless indicators of payrolls.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The quits rate likely remained just below its 2015-to-19 average in April, signalling slower ECI growth ahead.
- Construction spending has stagnated this year, the boom in S&L and manufacturing spending is over.
- The ISM manufacturing slipped again in May. And a plunge in new orders signals more bad news ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We expect a 0.23% rise in the core PCE deflator in April, but a rounded 0.3% print would be no great surprise.
- Real personal consumption probably rose by just 0.1%, given the drop in retail sales in April.
- Final domestic sales growth was strong in Q1, despite the low GDP headline, but that's about to change.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Q1 GDP growth will be revised down sharply today, thanks mostly to weaker consumption.
- Final sales still rose at a decent pace, but momentum is fading, and the labor market will reflect the downshift.
- Jobless claims probably are trending higher; look out for a hefty drop in pending home sales.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- State and local government investment spending has slowed sharply; soon it will fall outright…
- ...Both tax revenues and federal government payments to S&L are falling; cashflow is evaporating.
- The rebound in consumers' confidence likely will prove unsustainable if job growth weakens as we expect.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Ignore the rise in the composite PMI in May it has been a poor guide to GDP growth since the pandemic...
- ...The failure of the employment index to reverse April's plunge adds to signs of slowing payroll growth.
- We look for a small rise in core capital goods shipments in April, due to a calendar quirk, not an improving trend.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- S&P's employment index has a poor long-term correlation with payrolls, but markets are paying attention now.
- Leading indicators leave us looking for an above-consensus 230K initial claims print today.
- "Various" FOMC members signalled willingness to hike in the minutes, but the data has moved on since then.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see existing home sales unchanged last month, but the outlook for the rest of Q2 is dim.
- The May rise in Manheim used car prices looks like a blip; sluggish sales will lead to a further margin squeeze.
- Fed minutes unlikely to change market perceptions about easing timing.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- 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
- 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
- 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