It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:
Initial Claims for Unemployment Increase
For the week ending January 9, initial claims for unemployment increased by 7,000 to 284,000. That’s the second-highest level since July, and it missed economists’ estimates for jobless claims to decline to 275,000. The four-week moving average rose to 278,750, up from 275,750. Slowing global growth appears to be weighing on more than just Wall Street, as employers may be growing more cautious about expanding their staff. However, jobless claims still remain below the 300,000 threshold, and it would take a move above that level to signal that demand for employees is slowing down.
Retail Sales Decline
The Commerce Department announced this morning that overall retails sales declined 0.1% in December, which was in line with economists’ expectations. November retails sales were revised up to a 0.4% gain from the previously reported 0.2% increase. Overall, December closed out the weakest year in retail sales since 2009. Retail sales in 2015 only increased 2.1%, which is down from a 3.9% increase in 2014. So it appears that U.S. consumers are socking away a good portion of their savings from low fuel prices.
Producer Price Index (PPI) Slips
The Labor Department also reported this morning that the Producer Price Index (PPI) slipped 0.2% in December, in line with economists’ forecasts. Core PPI prices, which excludes food and energy, increased by 0.1% last month, also in line with expectations. The drop in the PPI this month further confirms that inflation remains non-existent in the U.S., and deflation is spreading. So the data-dependent Fed isn’t likely to raise interest rates this year and may need to consider weakening the U.S. dollar in order to combat deflation.
Industrial Production Declines
For the third-straight month, industrial production declined, falling 0.4% in December. That missed economists’ forecast for a 0.2% slide. November’s industrial production was revised to a 0.9% drop, down from the previously reported 0.6% decline. The strong U.S. dollar and weak energy prices continue to weigh on industrial production–and weak industrial production will also continue to weigh on overall U.S. GDP growth.
Business Inventories Fall
Business inventories fell 0.2% in November, while business sales slipped 0.2%. October’s business inventories were revised down to a 0.1% drop. Retail inventories, which exclude autos, increased 0.2% November. At the current sales pace, it would take 1.38 months to empty shelves. Business inventories are now at their lowest level since 2011, as business attempt to reduce their overflowing stockpiles. This is another sign of slowing GDP growth in the U.S.
Have a great weekend,