10 Things You Need To Know: February 22, 2023

Key data releases this week include: existing home sales (Tue), FOMC meeting minutes (Wed), Q4 GDP revision (Thu), personal income and spending (Fri), PCE Deflator (Fri), new home sales (Fri), and consumer sentiment (Fri).

BLS

February 14, 2023

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in January on a seasonally adjusted basis, after increasing 0.1 percent in December. Over the last 12 months, the all items index increased 6.4 percent before seasonal adjustment. The index for all items less food and energy rose 0.4 percent in January. The all items less food and energy index rose 5.6 percent over the last 12 months.

Trading Economics

February 15, 2023

Retail sales in the US unexpectedly jumped 3% month-over-month in January of 2023, the biggest increase since March of 2021 and way above market forecasts of a 1.8% rise. It follows a 1.1% drop in December. The so-called core retail sales which exclude automobiles, gasoline, building materials and food services and relate more with the consumer spending component of GDP, were up 1.7%.

Bloomberg

February 16, 2023

Producer prices for final demand in the US increased 0.7% month-over-month in January of 2023, the most in seven months and higher than market forecasts of 0.4%. The PPI climbed 6% from a year earlier. Excluding the volatile food and energy components, the so-called core PPI advanced 0.5% in January and 5.4% from a year earlier.

Bloomberg

February 17, 2023

 An index of US leading economic indicators fell in January for a 10th straight month, reflecting declines in consumer expectations and factory orders that underscore risks of a recession.  The Conference Board’s measure of the economic outlook for the next three to six months decreased 0.3% in January following a 0.8% decline a month earlier. The gauge is down 3.6% over the last six months.

Barron’s

February 20, 2023

“I’ve been counting barrels for 32 years and predicting the next few months in oil prices is as hard as it has ever been,” says Bob McNally, president of energy consulting firm Rapidan. A case could be made for $50 oil later this year, or $150, “and neither one of them will be crazy,” he says.

Barron’s

February 20, 2023

The debt-ceiling showdown in 2011 caused only a minor dislocation in the Treasury market. But the fiscal situation today is far more fragile. We have more than twice as much debt outstanding: $31 trillion, compared with $14 trillion in 2011. And the Fed’s ability to intervene in Treasury markets, as it did in March 2020, is now limited by its commitment to shrinking its balance sheet in the face of persistent inflation.

Barron’s

February 20, 2023

With only a few big names left to report, 80% of S&P 500 companies have now delivered results, putting the index’s earnings per share on track to contract 2.2% for the fourth quarter—the first quarterly drop since 2020’s third quarter. This isn’t a surprise: Weakening profit margins have been evident in recent quarters, and many companies have warned on profits. Consensus EPS estimates are already factoring in a 4.8% decline for 2023’s first quarter and 2.9% for the year.

The Wall Street Journal

February 15, 2023

Federal Reserve Bank of Chicago President Austan Goolsbee is under consideration to replace Lael Brainard as Fed vice chair, sources say. Goolsbee was an economics professor at the University of Chicago before joining the Fed in January and had been an adviser to former President Barack Obama.

Oxford Economics

February 15, 2023

“While this retail sales report was much stronger than expected, we stress these data are nominal and so overstate the strength of the consumer. While it may take time for spending to soften, we anticipate that cooling job and wage growth alongside stubborn inflation will drag down consumers’ willingness to spend. We continue to expect a recession later this year.