On balance, this week's indicator performance came in slightly better than expected, supporting economic resilience so far through the fourth quarter even as the headwinds of elevated inflation, tightening monetary policy and heightened uncertainty about the outlook remain firmly intact. While supportive to the sustainability of the economic expansion, the stronger-than-expected performance makes the Fed's job of taming inflation that much more difficult.
The first piece of encouraging news this week was the lower-than-expected gain in producer prices. In line with last week's CPI performance, the headline PPI increased 0.2% sequentially, two-tenths below expectations. The more moderate pace of price gains cooled the year-over-year rate for the fourth straight month, dropping 0.5 percentage points to a still elevated 8.0%. October's headline increase reflected a 0.6% rise in final demand goods prices (about 60% of this increase can be traced to a 5.7% gain in gasoline) as final demand services prices slipped 0.1%, marking the first monthly drop since November 2020. While showing prices are beginning to head in the right direction, inflation is still running at an unacceptably high pace for the Fed. Yet another similar, downward trending performance from the November CPI report next month may provide enough evidence for the Fed to pull back on the pace of rate hikes as it seeks to bring down inflation markedly.
Highlighting the resiliency of the U.S. consumer, total retail sales increased a stronger-than-expected 1.3% in October, boosted, in part, by a 1.3% jump in motor vehicles & parts and a 4.1% rise at gasoline stations. Excluding the aforementioned and building materials and food, control group sales—which feed into the personal consumption expenditures component of GDP—increased by a strong 0.7% last month, on top of upward revisions to September and August. It is clear consumers are willing to run down savings and accumulate credit card debt in order to maintain their current pace of spending. The strong start to the current quarter suggests upside risk to our 6% year-over-year holiday shopping spending call and, in turn, Q4 consumer spending and GDP growth. Indeed, the Atlanta Fed GDPNow model currently projects Q4 U.S. real GDP growth at a 4.2% annualized rate.
This Week's State Of The Economy - What Is Ahead? - 06 August 2021
Wells Fargo Economics & Financial Report / Aug 16, 2021
Back to the economy, issues with supply constraints remains a broken-record reference, but data this week highlighted the economy\'s resilience in spite of those continuing problems.
This Week's State Of The Economy - What Is Ahead? - 27 March 2020
Wells Fargo Economics & Financial Report / Mar 28, 2020
The U.S. surpassed Italy and China with the most confirmed cases of COVID-19. Europe is still the center of the storm, with the total cases in Europe’s five largest economies topping 230,000.
This Week's State Of The Economy - What Is Ahead? - 14 February 2020
Wells Fargo Economics & Financial Report / Feb 15, 2020
Retail sales increased for a fourth straight month in January, underscoring the resiliency of the U.S. consumer. Fundamentals are solid and support our expectations for healthy consumer spending gains in coming months.
This Week's State Of The Economy - What Is Ahead? - 01 July 2022
Wells Fargo Economics & Financial Report / Jul 14, 2022
As with the Mets and Yankees when they ran into the Astros over the last couple days, consumers staying power is showing signs of running out as inflation persists and confidence moves sharply lower.
This Week's State Of The Economy - What Is Ahead? - 16 August 2019
Wells Fargo Economics & Financial Report / Aug 17, 2019
Markets gyrated this week as the spread between the ten- and two-year Treasury\'s turned negative for the first time since 2007. Financial markets seem to expect that the sharp slowdown in growth overseas will soon spread to the United States.
This Week's State Of The Economy - What Is Ahead? - 26August 2022
Wells Fargo Economics & Financial Report / Aug 29, 2022
I can understand how the opportunity to participate in lots of scintillating economic policy discussions could make fishing look exciting in comparison.
This Week's State Of The Economy - What Is Ahead? - 08 October 2021
Wells Fargo Economics & Financial Report / Oct 15, 2021
September\'s disappointing employment report clearly takes center stage over this week\'s other economic reports. Nonfarm employment rose by just 194,000 jobs, as employers continue to have trouble finding the workers they need.
This Week's State Of The Economy - What Is Ahead? - 21 August 2020
Wells Fargo Economics & Financial Report / Aug 18, 2020
Despite indications of lost momentum elsewhere, residential construction activity is picking up steam.
This Week's State Of The Economy - What Is Ahead? - 04 December 2020
Wells Fargo Economics & Financial Report / Dec 09, 2020
Manufacturing held up relatively well in November, despite a larger-than-expected dip in the ISM manufacturing survey. The nonfarm manufacturing survey rose slightly.
This Week's State Of The Economy - What Is Ahead? - 03 January 2020
Wells Fargo Economics & Financial Report / Jan 04, 2020
Markets were also pressured from the latest ISM manufacturing report, which signaled further deterioration in the sector with the index falling to its lowest level since 2009.
