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:
Consumer Price Index (CPI)
On Tuesday, the Labor Department announced that its Consumer Price Index (CPI) climbed 0.3% in September. This was in line with economists’ expectations. However, excluding food and energy, the core CPI rose just 0.1%—this was below the consensus estimate of a 0.2% increase. Looking back over the past 12 months, the CPI has risen 1.5% and the core CPI has increased 2.2%. However, if the Fed does raise rates, it’s not expected to impact inflation all that much. That’s because core prices are rising on higher healthcare costs, as well as increasing rental costs. The burden of higher healthcare and housing costs is clearly weighing on consumer spending.
The Commerce Department reported that housing starts plunged 9% in August. The reported 1.047 million pace was the slowest since March 2015. Breaking it down, housing starts for multi-family homes plunged 39% while single-family housing starts rose 8.1%. Over the past 12 months, housing starts have plunged nearly 12%. This news doesn’t bode well for Q3 GDP, which will be revealed next Friday October 28.
Beige Book Survey
The Fed released its Beige Book survey of its 12 districts in preparation for its early November Federal Open Market Committee (FOMC) meeting. The Beige Book survey stated that the U.S. economy is growing at a modest to moderate pace. Interestingly, the word “election” was mentioned eight times in the Beige Book survey as a reason that business spending and other economic activity has been postponed. This admission is essentially a code word to reveal that the Fed will not be raising key interest rates before the November Presidential election due to all the uncertainty surrounding the election.
That’s all I have for you this week; I’ll be back online on Monday with your weekly ratings changes.
Have a great weekend,