10 Things You Need to Know: April 12, 2022

Key data releases this week include: NAHB Housing Market Index (Mon), housing starts (Tue), existing home sales (Wed), Beige Book (Wed), and leading economic indicators (Thu).

Haver
April 12, 2022
The NFIB Small Business Optimism Index fell to 93.2 in March, its third consecutive monthly decline and lowest reading since April 2020, from 95.7 in February. In March, only two of the index’s 10 components increased from February, five declined and three were unchanged. Inflation overtook labor quality as the major concern of small businesses.

Haver
April 12, 2022
The Consumer Price Index gained 1.2% (8.5% y/y) last month after rising 0.8% in February. It was the largest monthly increase since October 2005. The increase matched expectations in the Action Economics Forecast Survey. Prices excluding food & energy rose 0.3% last month (6.5% y/y), the weakest monthly increase in six months. It compared to a 0.5% expected gain.

Haver
April 14, 2022
Total retail sales including food service and drinking establishments increased 0.5% during March (6.9% y/y) after rising 0.8% in February, revised from 0.3%. A 0.6% sales increase had been expected in the Action Economics Forecast Survey. Sales excluding motor vehicles and parts strengthened 1.1% (9.1% y/y) following a 0.6% February increase, revised from 0.2%. Expectations had been for a 0.9% increase.

Financial Times
April 12, 2022
German economist Otmar Issing, widely viewed as one of the founders of the euro, said he is worried about the European Central Bank’s “misdiagnosis” of the factors that brought about the acceleration of inflation in the eurozone. “The ECB has contributed massively to this trap in which it is now caught because we are heading towards the risk of a stagflationary environment,” he said.

Bloomberg
April 18, 2022
The Chinese Communist Party’s flagship newspaper called on the nation to support President Xi Jinping’s Covid Zero strategy, showing any shift in policy is unlikely even as lockdowns in Shanghai and elsewhere threaten to hurt the economy. Tens of millions of people in the city of Shanghai and the northeastern province of Jilin have been barred from leaving their homes, fueling widespread criticisms of his government’s response to the highly infectious omicron variant.

Barron’s
April 18, 2022
This coming week, companies representing 15% of the S&P 500 index’s market value will report quarterly results, followed by 48% the following week, and 16% the week after that. By Mother’s Day on May 8, the relative health of the stock market will have been revealed.

Barron’s
April 18, 2022
For some consumers, fuel costs are heavily restraining discretionary spending. While total sales in dollars are up, sales are off in real terms, after adjusting for inflation. It appears that many consumers—especially lower-income households—are ramping up their use of credit cards as they struggle to pay at the supermarket and the gas pump.

Barron’s
April 18, 2022
John Williams, an economist who runs the website Shadow Government Statistics, uses the CPI methodology the government employed in the 1980s, before it changed how it treats housing, and introduced concepts like substitution. The official CPI no longer measures the cost of maintaining a constant standard of living, Williams says. His index, which he says does reflect the cost of maintaining a standard of living, rose 17.2% from a year earlier—the fastest since 1947.

Capital Economics
April 14, 2022
We still expect the Fed to deliver a series of 50bp rate hikes at its next three policy meetings. But weak GDP growth and a drop in core inflation to nearer 4% should persuade the Fed to revert to 25bp hikes from September onwards.