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
According to Monday’s report from the Labor Department, the Consumer Price Index (CPI) rose 0.4% in November, in line with economists’ expectations. In the past 12 months, the CPI has increased 2.2%, also in line with economists’ median estimate. Core CPI, which excludes the more volatile categories of food and energy, moved 0.1% higher in November, but fell from its 1.8% rise in October. Looking at the past 12 months, core CPI is up 1.7%.
Looking deeper, overall energy prices rose 3.9%, which includes a 7.3% spike in November’s gasoline prices, after gasoline prices dropped 2.4% in October. Generally, the sustained softness in core CPI suggests that the Federal Reserve (Fed) is going to continue on its gradual path of interest rate increases, and not pursue a more aggressive path forward for key interest rates. Any price gains appear likely to stay stubbornly below the Fed’s 2% inflation target for some time to come.
In Thursday’s report from the Commerce Department, retail sales surged 0.8% in November, surpassing economists’ estimates for a 0.3% increase and topping October’s revised 0.5% increase. With Americans opening their wallets to buy goods and services for the holiday season, November’s numbers came in 5.8% higher on an annual basis.
Retail sales were fueled by both online and brick-and-mortar sales, and represent the biggest November pickup since 2011. Department store sales were up 3.6% from the year ago period, which is the largest gain in November since 2010. Overall, this report is extremely positive, and suggests that we have officially entered the happy time of year and can look forward to a strong fourth quarter.
On Thursday, the Commerce Department reported that after being unchanged in September, U.S. business inventories slipped 0.1% in October. Inventories, a central component of GDP, are estimated to total $1,885.7, just shy of the $1,887.2 revised reading in September. This drop matched economists’ estimates and suggests that inventory investment won’t be a significant input to economic growth in the fourth quarter.
Peeling back the layers, business sales rose 0.6%, after jumping 1.6% in September. At October’s pace, it would take 1.35 months for businesses to empty their shelves. Overall, despite the modest decrease, the report is not significantly changed from the month prior month and was not surprising to Wall Street.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Have a great weekend,