10 Things You Need to Know: February 4, 2025
Key data releases this week include: ISM Manufacturing (Mon), JOLTS Jobs Openings (Tue), factory orders (Tue), trade balance (Wed), ISM Services (Wed), nonfarm productivity (Thu), consumer sentiment (Fri), and nonfarm payrolls (Fri).
Bloomberg
February 3, 2025
US factory activity expanded last month for the first time since 2022. The Institute for Supply Management’s manufacturing gauge rose 1.7 points in January to 50.9. Economists had expected a reading of 50.0. The surveys were conducted before President Donald Trump announced 25% tariffs on imports from Canada and Mexico that risk disrupting supply chains.
Haver
January 28, 2025
U.S. house prices rose 0.3% m/m (4.2% y/y) in November after a rise of 0.5% in October, according to the Federal Housing Finance Agency (FHFA) House Price Index. The gain matched economists’ expectations.
Haver
January 30, 2025
Real GDP grew 2.3% (SAAR) last quarter following a 3.1% gain in the third quarter and 3.0% growth in Q2. The increase fell short of expectations for a 2.7% rise in the Action Economics Forecast Survey. Growth during the four quarters of 2024 fell to 2.5% from 3.2% in 2023. Personal consumption expenditures surged 4.2% (3.2% y/y).
Haver
January 31, 2025
Personal consumption expenditures (PCE) increased 0.7% (5.7% y/y) in December, after a 0.6% November rise. A 0.5% increase was expected in the Action Economics Forecast Survey. Personal income rose 0.4% (5.3% y/y), matching expectations.
Barron’s
February 3, 2025
Importantly, DeepSeek’s $5.6 million costs excluded items related to “prior research and ablation experiments on architectures, algorithms, or data.” In short, the number omits all R&D funds for the model’s architecture, algorithms, data acquisition, graphics processing units, and test runs. Comparing a theoretical final training-run cost to U.S. company spending on AI infrastructure is apples to oranges. DeepSeek’s overall cost is likely much higher.
Barron’s
February 3, 2025
The Federal Reserve’s favored inflation measure, the core personal consumption expenditure price deflator, rose 0.2% month over month, and 2.8% year over year in December, as the consensus predicted, but the good news is that to three decimal places it is 0.159%, so below the 0.17% month-on-month change we need to average over 12 months to deliver 2% year-on-year [price growth].
Haver
January 29, 2025
At Wednesday’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was left unchanged at 4.25% to 4.50%. It followed reductions at the three previous meetings from a high of 5.25% to 5.50% in place in mid-September. Today’s target range matched expectations in the Action Economics Forecast Survey.
Capital Economics
January 29, 2025
The FOMC’s policy statement suggests that it is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of fiscal, trade and immigration policies that the incoming Trump administration appears to be embracing. Meanwhile, the resulting surge in US inflation from tariffs and other future measures is going to come even faster and be larger than we initially expected.
Bloomberg
February 3, 2025
Gold hit a new all-time high as the dollar pushed lower and traders sought safety amid concerns over President Donald Trump’s tariff measures. Bullion surged as much as 1.4% to $2,798.59 an ounce, surpassing its previous all-time high set in October. A weaker dollar makes the bullion more appealing for investors holding other currencies as it’s priced in the US currency.