Chief Economist Scott Brown discusses the latest market data.
Inflation figures surprised to the upside. The Consumer Price Index rose 0.9% in October (+6.2% year over year), up 0.6% (+4.6% year over year) excluding food and energy. Gasoline rose 6.1% (+49.6% year over year). Used vehicle prices rose 2.5% (+26.4% year over year). The Bureau of Labor Statistics noted that price increases were “broad-based,” while the Cleveland Fed’s Trimmed-Mean CPI – which excludes the highest and lowest price moves – rose 0.7%, suggesting the range of items experiencing higher inflation is widening, in contrast to the narrow range of higher inflation seen in the spring. The Producer Price Index indicated higher inflation at the earlier stages of production.
The University of Michigan Consumer Sentiment survey results for early November showed that higher inflation pushed sentiment to its lowest level in a decade, while partisan splits in sentiment widened further. The Chicago Fed Advance Retail Trade Summary (CARTS) showed strong results for October. Job openings were off their highs again in September, but quit rates continued to set records as 4.4 million workers quit their jobs that month.
Next week: Retail sales are expected to be very strong in October. Some of that increase reflects higher prices. However, it’s likely that all the news about possible shortages due to supply chain issues led many to start their holiday shopping early. Investors will also be awaiting the announcement of President Biden’s nominee for Fed chair.