PM Datanote: US Employment Cost Index, Q3 2025

Much weaker wage growth likely lies ahead.

11 December 2025 US Monitor Expect a brief skip in the Fed's easing cycle, not a long hiatus

The dots imply three regional Fed presidents who will
vote in 2026 disagreed with this meeting’s easing...

...But we reckon all the permanent voters expect to
ease in 2026; labor data will trigger March action.

Year-over-year growth in the ECI was stable at 3.6%
in Q3, but leading indicators signal a sharp fall soon. 

10 December 2025 US Monitor FOMC likely will signal a Q1 pause, but only tentatively

• Investors already expect a two-meeting hiatus in the easing cycle; the FOMC will not signal a longer wait.
• Recent data surprises have reinforced the case for easing; much more data will be available in January.
• We expect 75bp of easing in 2026, but fiscal policy and FOMC personnel changes cloud the outlook.

9 December 2025 US Monitor Weaker labor demand is more than offsetting the immigration hit

• Immigration has slowed sharply this year, but the labor force likely still is growing, slowly.
• The recent upward creep in unemployment implies labor demand has slowed by more than supply.  
• Higher unemployment will squeeze wage growth and keep the pressure on the FOMC to continue easing.

PM Datanote: US Personal Incomes & Spending / Michigan Consumer Survey

Soft September sets for stage for more consumer weakness in Q4.

8 December 2025 US Monitor Consumer resilience is ebbing as year-end approaches

• Spending rose by 2.7% in Q3, but the stagnation in September likely foreshadows a very weak Q4.
• Real incomes are barely rising, and many near-real time indicators point to a sharp slowdown in growth.
• Q1 likely will be weak too, but bumper tax refunds and a pick-up in hiring will support a Q2 revival.

5 December 2025 US Monitor FOMC to lower inflation forecasts after September's PCE data

• We look for a 0.22% rise in the September core PCE deflator, which would keep the inflation rate at 2.9%...
• ...This will enable FOMC participants to lower their Q4 forecast, clearing the path for easing policy again.
• Initial claims plunged because seasonal adjustment has gone amiss; labor market slack is still rising.

PM Datanote: US Industrial Production, September 2025

Going nowhere fast.

4 December 2025 US Monitor Private payrolls probably holding up better than ADP's data suggest

• ADP’s numbers have considerably understated the initial official estimates of private payrolls this year. 
• Reliable surveys suggest an initial private print of 75K-to-100K in November, still too soft for comfort. 
• A raft of indicators point to consumer weakness in Q4. We think spending will rise by only around ½%.

3 December 2025 US Monitor Is the equilibrium unemployment rate increasing?

• Lower immigration, AI, tariffs and federal job cuts have potential to lift the natural unemployment rate...
• ...But firms are filling openings more easily and plan to slow wage growth, pointing to excess unemployment.
• No signs of excessive unemployment by state or by sector, indicative of a still-low equilibrium rate.

PM Datanote: US ISM Manufacturing Survey, November 2025

Core goods inflation likely to retreat in H1 2026.

2 December 2025 US Monitor Is a 25bp easing in the funds rate next week now locked in?

• Investors see a near-90% chance of the FOMC easing  next week, back to levels before October’s meeting.
• Sometimes, the Chair moves markets during the  blackout via the WSJ, but that seems unlikely now.
• Manufacturing payrolls have fallen materially in 2025,  but likely aren’t a canary in the coalmine this time.

1 December 2025 US Monitor Why are tariff revenues falling short of everyone's projections?

• The average effective tariff rate is currently just 12%, far short of the near-20% widely expected in spring.
• China imports have dived; more imports than expected from Canada and Mexico are USMCA-compliant.
• The plunge in the Cass Freight Index looks alarming, but it probably is overstating weakness in industry.

November 2025 - US Economic Chartbook

EXPECT AN EXTENDED FED EASING CYCLE...

• ...DRIVEN BY A WEAK LABOR MARKET AND FALLING INFLATION

PM Datanote: US Durable Goods Orders, September 2025

Improving slightly, but investment still soft outside of tech.

PM Datanote: US Consumer Confidence/Pending Home Sales

Weak jobs market continues to depress consumers.

PM Datanote: US Retail Sales, September 2025

Weak September sales are a sign of what's to come.

PM Datanote: US PPI, September 2025

Core PCE inflation set to undershoot the FOMC’s forecast in Q4.

26 November 2025 US Monitor PPI data leave core PCE inflation set to undershoot the FOMC's forecast

• PPI and CPI data imply the core PCE deflator rose by just 0.22% in September.
• Goods price rises are slowing and retailers, especially auto retailers, are still partially absorbing the tariffs.
• The Conference Board’s consumer survey implies the labor market need more support from the FOMC.

25 November 2025 US Monitor Retail sales likely grew modestly in September, before a lackluster Q4

• We look for a subpar 0.3% increase in September retail sales, consistent with real spending edging down.
• Food service sales likely fell sharply, while the more reliable indicators of control sales were soft.
• Bloomberg Second Measure data, Google search volumes and hotel room occupancy signal a weak Q4.