Economic Forecast: A Data Blizzard Ahead
This week’s economic forecast is expected to be a data blizzard, with a plethora of reports and speeches from Federal Reserve officials that will provide insight into the state of the economy. The markets are eagerly awaiting the release of key data on inflation, retail sales, and industrial production, which will help shape the Federal Reserve’s monetary policy decision on January 28.
Inflation Expectations
The consumer price index (CPI) is expected to show a moderate increase, with the Cleveland Fed’s Inflation Nowcasting model predicting a 0.2% monthly increase, or 2.6% year-over-year. The producer price index (PPI) and import/export prices will also be released, providing further insight into inflation trends.
Retail Sales and Jobless Claims
Retail sales are expected to increase slightly in December, following a flat reading in October. Jobless claims are expected to remain low, indicating a strong labor market. The National Federation of Independent Business’ Small Business Optimism Index is also expected to provide valuable insights into the state of the economy.
Composite Economic Indicators and Business Surveys
The composite cyclical indicators for December are expected to show that the coincident index remains at a record high, while the leading index continues to fall. The New York and Philadelphia Federal Reserve banks will release their January business surveys, providing further insight into the state of the economy.
Federal Reserve Policy
The Federal Reserve is not expected to ease monetary policy again later this month, despite some calls for rate cuts. Fed Governor Stephen Miran has suggested that 150 basis points of rate cuts may be necessary to boost the job market, but this is not expected to happen anytime soon. The speeches by several Fed officials this week, including New York Fed President John Williams and Governors Miran, Michael Barr, Michelle Bowman, and Vice Chair Philip Jefferson, will provide valuable insights into the Fed’s thinking.
Conclusion
In conclusion, this week’s economic data releases and speeches from Federal Reserve officials will provide valuable insights into the state of the economy and the Fed’s monetary policy decision on January 28. While some economists are calling for rate cuts, the Fed is not expected to ease policy again this month. The data releases on inflation, retail sales, and jobless claims will be closely watched, and the speeches by Fed officials will provide further guidance on the Fed’s thinking. As the economy continues to evolve, it is essential to stay informed about the latest developments and their potential impact on the markets.
