10 Things You Need To Know: April 19, 2023
Key data releases this week include: NAHB Housing Market Index (Mon), housing starts (Tue), Beige Book (Wed), existing homes sales (Thu), and leading economic indicators (Thu).
The NFIB Small Business Optimism Index slipped to 90.1 in March from 90.9 in February and 90.3 in January, according to the National Federation of Independent Business. This was the fifteenth consecutive month below the 49-year average of 98. Six of the index’s 10 components declined last month, while three increased and one was unchanged.
The Consumer Price Index edged up a less-than expected 0.1% m/m (5.0% y/y) in March following a 0.4% monthly gain in February. The 5.0% y/y rate was the lowest since May 2021 and well below the recent peak of 9.1% in June 2022. The Actions Economic Forecast Survey had expected a 0.3% monthly increase. The reading on the core index in March, however, was a little more worrisome. It rose 0.4% m/m, in line with expectations, with the y/y ticking up to 5.6% from 5.5% in February.
The Producer Price Index for final demand declined 0.5% (+2.7% y/y) during March after holding steady in February. No change had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy fell 0.1% after two consecutive 0.2% increases. The 3.4% y/y increase was the weakest in two years. A 0.2% rise had been expected.
April 14, 2023
Consumers continued to spend cautiously during March. Retail sales fell 1.0% (+2.9% y/y) following a 0.2% February dip, revised from -0.4%. These declines followed a 3.1% January surge, revised from 3.2% reported last month. The March decline exceeded the 0.3% weakening expected in the Action Economics Forecast Survey. Spending in the retail control group, which excludes autos, building materials, gasoline & restaurants, fell 0.3% (+5.5% y/y).
April 17, 2023
If we take the inflation numbers since the summer, when the Fed’s rate hikes began to bite, and annualize them, it produces significantly lower inflation numbers. The PCE rose 2.2% in the eight months from July through February, which works out to a 3.3% annualized figure. That’s a lot closer to the Fed’s 2% target than the 12-month 5.0% number is. The CPI was up 2.4% for the nine months ended in March, which works out to 3.2% annualized.
April 17, 2023
Private investors haven’t been the only ones stepping up their purchases of gold this year. Data from the World Gold Council showed that central banks around the world acquired a net 157 tons of gold in the first two months of 2023, the fastest pace of buying at the start of the year in a decade. Central banks often hold foreign currencies and gold in their reserves. The U.S. dollar remains dominant, but more countries are working to diversify their reserves.
The WSJ, Reuters
According to meeting minutes, Federal Reserve officials concluded additional measures may be necessary to bring inflation back to the central bank’s 2% target, with most of the 18 participating members expecting one more rate hike this year. The meeting minutes also showed a staff forecast suggesting a mild recession is likely to start later this year.
Reuters, FT, MarketWatch
April 11. 2023
The idea of one more 25-basis-point interest-rate hike in 2023 is “a reasonable starting place,” but the Federal Reserve’s actual course of action will depend on the data, said John Williams, president of the Federal Reserve Bank of New York. Meanwhile, new Chicago Fed President Austan Goolsbee urged caution in the wake of recent banking turmoil.
The Hill, Bloomberg
April 12, 2023
There are likely to be more bank failures going forward, according to Berkshire Hathaway Chairman and CEO Warren Buffett, but depositors’ money should be safe. “We are not through with bank failures,” Buffett said