U.S. - Inflation Comes Back in Focus
- Market attention was concentrated on the January consumer price data, as inflation has come back into focus. There is renewed concern among market participants that inflation is about to take off once the economy re-opens and demand accelerates. But, such concerns have not yet meaningfully presented themselves in consumer price data, with the core consumer price index unchanged for the month of January.
- While we expect inflation to firm later this year, we believe the Federal Reserve remains less concerned about inflation and more worried about labor market scarring. The labor market recovery continues to stumble, with an additional 793K workers having filed an initial claim for unemployment insurance last week.
- President Biden and Chinese President Xi had their first conversation this week since Biden was elected. Reports suggest numerous topics were discussed, but no new policy concerning tariffs was put in place.
Global - Mixed Finish to 2020, Soft Start to 2021
- The European economy showed mixed, albeit overall subdued, trends at the end of last year. United Kingdom Q4 GDP surprised to the upside with a 1.0% quarter-over-quarter gain. In contrast, national level manufacturing data for December from the Eurozone were mixed, and Eurozone-wide industrial output is expected to fall 0.5% for December. The mixed trends were not just in Europe, with Brazil reporting a large decline in December retail sales but an increase in December overall economic activity.
- While 2020 finished on a mixed note, it is likely that Europe's economy will show further weakness in early 2021. February PMI surveys are due from both the Eurozone and the U.K. next week. While the services PMI is expected to rise modestly for both economies, they are also expected to remain below the breakeven 50 level. That suggests a further (Eurozone) or renewed (U.K.) contraction in economic activity, and we forecast Q1 GDP declines for both economies.
This Week's State Of The Economy - What Is Ahead? - 31 January 2020
Wells Fargo Economics & Financial Report / Feb 01, 2020
Mexico’s economy has slowed notably over the last year, with the economy contracting again in Q4, indicating a full-year contraction for 2019.
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? - 28 February 2020
Wells Fargo Economics & Financial Report / Feb 29, 2020
The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation.
This Week's State Of The Economy - What Is Ahead? - 20 September 2019
Wells Fargo Economics & Financial Report / Sep 21, 2019
The Federal Reserve reduced the fed funds rate 25 bps this week, continuing to cite economic weakness overseas and muted inflation pressures.
This Week's State Of The Economy - What Is Ahead? - 02 July 2020
Wells Fargo Economics & Financial Report / Jul 04, 2020
It was a mildly busy week for foreign economic data and events, while global COVID-19 cases continued to rise.
This Week's State Of The Economy - What Is Ahead? - 16 August 2024
Wells Fargo Economics & Financial Report / Aug 22, 2024
Inflation continues its gradual descent, and business optimism has trended higher amid cooler input price growth and steady consumer spending.
This Week's State Of The Economy - What Is Ahead? - 09 June 2023
Wells Fargo Economics & Financial Report / Jun 14, 2023
An unexpected spike in jobless claims is a sign that cracks are forming in the labor market. Higher mortgage rates look to be hindering a housing market rebound.
This Week's State Of The Economy - What Is Ahead? - 22 July 2022
Wells Fargo Economics & Financial Report / Jul 27, 2022
July\'s NAHB Housing Market Index dropped 12 points to 55, the second largest monthly decline on record behind April 2020\'s pandemic-induced collapse.
This Week's State Of The Economy - What Is Ahead? - 05 April 2024
Wells Fargo Economics & Financial Report / Apr 09, 2024
Nonfarm payrolls expanded 303K in March, surpassing all estimates submitted to Bloomberg. The continued strength in hiring suggests less urgency for policymakers at the Federal Reserve to lower the target range of the fed funds rate.
This Week's State Of The Economy - What Is Ahead? - 20 November 2020
Wells Fargo Economics & Financial Report / Nov 24, 2020
The international economic news over the past week has been somewhat mixed. On the positive side, China’s October data showed ongoing growth in manufacturing and firming retail and service sector activity.
