10 Things You Need to Know: January 22, 2025
Key data releases this week include: leading economic indicators (Thu), existing home sales (Fri), and consumer sentiment (Fri).
Haver
January 14, 2025
The NFIB Small Business Optimism Index rose to 105.1 in December, the eighth m/m rise in nine months and the highest level since October 2018. This was the second straight month that the index was above the 51-year average of 98. Inflation continued to be an issue facing small businesses, as reported by 20% of NFIB members in December as the single most important problem.
Haver
January 15, 2025
The Consumer Price Index increased 0.4% m/m (2.9% y/y) in December, up from 0.3% m/m in November. The Action Economics Forecast Survey had looked for a 0.3% m/m gain. The core CPI rose 0.2% m/m (3.2% y/y) in December. The Action Economics Survey had expected a 0.3% monthly gain.
Haver
January 16, 2025
Total retail sales increased 0.4% m/m in December after an upwardly revised rise of 0.8% in November. A 0.6% m/m December increase had been expected in the Action Economics Forecast Survey. Sales in the retail control group rose 0.7% (4.1% y/y) in December, following a 0.4% rise in November.
Barron’s
January 21, 2025
Interest on the debt has grown as the Federal Reserve has raised interest rates to fight inflation. Interest payments cost the federal government—and by extension, all U.S. taxpayers—$882 billion in 2024. They are expected to cross the $1 trillion mark this year.
WSJ, Reuters
January 16, 2025
Federal Reserve Bank President Beth Hammack dissented from the Fed’s decision to cut interest rates at its December meeting, arguing that “we still have an inflation problem.” Meanwhile, Chicago Fed President Austan Goolsbee has expressed optimism about labor market stability, easing fears of rising unemployment. Federal Reserve Governor Christopher Waller has indicated as many as four cuts might be possible this year if disinflation trends continue.
The Washington Post, CNBC, NYT
January 21, 2025, January 20, 2025, January 20, 2025
US President Donald Trump has announced plans to impose 25% tariffs on Mexico and Canada by February 1, citing concerns over undocumented migrants and drug trafficking. The move threatens to trigger a trade war among the members of the US-Mexico-Canada Agreement, with both Canada and Mexico vowing retaliation.
Capital Economics
January 21, 2025
The economy continues to do well with GDP growing strongly, employment growth solid and core inflation pressures easing again. We are concerned, however, that the Trump administration’s policies will weigh on GDP growth over the course of this year. Providing that Trump waits until around mid-year to impose tariffs, we still see scope for the Fed to cut interest rates twice in the first half of 2025, taking the fed funds target rate to between 3.75% and 4.00%.
Oxford Economics
January 15, 2025
The housing market in 2025 faces a difficult balancing act, with a notable decline in mortgage rates likely needed to help unwind the lock-in effect and thaw the supply of existing homes for sale. However, we believe such a decline would likely jumpstart demand from potential first-time homebuyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exacerbating already-high home prices and purchase affordability.
WSJ
January 16, 2025
The World Bank projects global economic growth of 2.7% for 2025 and 2026, matching last year’s rate but falling short of pre-pandemic levels. The report highlights a widening income gap between developing and developed countries, with the US and China showing stronger growth. “This stable growth is not sufficient,” said Ayhan Kose, deputy chief economist at the World Bank. “We should not accept this new, mediocre normal when it comes to global growth.”