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? - 10 November 2020
Wells Fargo Economics & Financial Report / Nov 17, 2020
The U.S. election has come and gone, but we have not made any meaningful changes to our economic outlook, which continues to look for further expansion in the U.S. economy in coming quarters.
This Week's State Of The Economy - What Is Ahead? - 05 February 2021
Wells Fargo Economics & Financial Report / Feb 10, 2021
Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month\'s 227,000-job drop.
This Week's State Of The Economy - What Is Ahead? - 20 May 2022
Wells Fargo Economics & Financial Report / May 29, 2022
U.S. retail sales topped expectations in April, while industrial production also grew more rapidly than economists expected. Data on housing starts, home sales and homebuilder sentiment, however, showed tentative signs of cooling.
This Week's State Of The Economy - What Is Ahead? - 10 March 2023
Wells Fargo Economics & Financial Report / Mar 14, 2023
Financial markets were looking for validation that January\'s unexpected strength was not a fluke and that the downward slide in economic momentum experienced late last year had stabilized.
This Week's State Of The Economy - What Is Ahead? - 16 July 2021
Wells Fargo Economics & Financial Report / Jul 30, 2021
Visiting from Texas, it felt more like fall, which like the Texas cold-snap last February just goes to show that it’s a case of what you’re used to.
The Regional Breakdown Of A Labor Market In Meltdown
Wells Fargo Economics & Financial Report / May 26, 2020
Employment fell in all 50 states and 43 states saw their unemployment rate rise to a record in April. The damage is already hard to fathom-a 28% unemployment rate in Nevada and still another month of job losses ahead.
This Week's State Of The Economy - What Is Ahead? - 10 January 2020
Wells Fargo Economics & Financial Report / Jan 11, 2020
The week began amid rising tensions carrying over from the U.S. killing of Iranian General Qasem Soleimani last Friday.
This Week's State Of The Economy - What Is Ahead? - 28 August 2020
Wells Fargo Economics & Financial Report / Aug 26, 2020
After a revised look at GDP this week suggested the second quarter may not have been quite as bad as first estimated, attention shifts to the current quarter.
This Week's State Of The Economy - What Is Ahead? - 22 October 2021
Wells Fargo Economics & Financial Report / Oct 25, 2021
Restrictions from a renewed COVID outbreak in China, regulatory changes weighing on local financial markets and a potential collapse of Evergrande have all contributed to a slowdown in Chinese economic activity.
This Week's State Of The Economy - What Is Ahead? - 28 May 2021
Wells Fargo Economics & Financial Report / Jun 08, 2021
This week\'s light calendar of economic reports showed supply chain disruptions tugging a little at economic growth.