It’s a big numbers week for the U.S. economy. By Friday, we’ll know how fast prices are rising, how much consumers are spending and whether good vibes can hold — or even improve — for another month.
Here’s what to keep an eye out for:
CPI: The party kicks off at 8:30 a.m. morning when the Bureau of Labor Statistics releases the latest consumer price index covering the month of January.
The last few months’ worth of price data has been more or less exactly what the Federal Reserve wants to see. That said, officials like Chair Jay Powell have stressed it’s unlikely the U.S. central bank will cut rates at their next meeting in March.
Economists expect this CPI report to clock in around an annual 2.9% for January, which would be down nearly half a percent from December’s rate thanks largely to falling energy prices. Core CPI, which strips out energy and food prices, is expected to hit 3.7%, down 20 basis points from December.
Retail: Hot off of December’s holiday spending numbers, January’s retail spending figures from the Census Bureau will help set expectations for the rest of 2024. We’ll get that data on Thursday at 8:30 a.m.
December’s retail figures shattered expectations, growing by 0.6% instead of the forecasted 0.4%. It’s not uncommon for numbers to slip a bit in the wake of the holiday season, but in 2023, January’s data was significantly better than December’s. So who knows?
Remember: Consumer spending is the U.S. economy’s most powerful engine. If it starts to sputter in earnest, that’s a tough problem to solve.
Vibe check: The University of Michigan will release its latest survey of consumer sentiment on Friday at 10 a.m.
This is a long-running assessment of how consumers feel about their economic health. But the survey garnered a lot of attention last month when it posted the largest two-month increase in sentiment since the 1990s.
President Joe Biden is banking on Americans embracing his economy as we close in on November, though former President Donald Trump continues to outperform in voter expectations on the issue.
That disconnect makes a bit more sense when you consider the historical trends here. Consumer sentiment in UMich’s last survey was still 7% below average going all the way back to 1978. If Friday’s release closes the distance, it’ll be that much easier for Biden to run on the economy. Probably.
Meanwhile at the Fed: We’ll be tracking a pair of speeches this week from Vice Chair for Supervision Michael Barr. We’re particularly interested in the speech Barr is giving on Wednesday about “monetary policy and bank regulation.”
Elevated interest rates can put a lot of pressure on bank balance sheets — look no further than the collapse of Silicon Valley Bank. If Barr has thoughts to share here, Wall Street will take note.
— Brendan Pedersen
