Thursday, February 23rd, 2023
Two sizable pieces of information for the market to digest are out this morning: Weekly and Continuing Jobless Claims, and the first revision to Q4 Gross Domestic Product (GDP). The initial results seeing a pullback in early trading gains, from +100 points on the Dow to +40 points now, +25 on the S&P 500 to +12 now, and from +125 points on the Nasdaq to +90 right now.
Q4 GDP posted a still-healthy +2.7%, though this is down 20 bps from the initial print. The biggest hit came from Consumption, which unwound from +2.1% originally reported to +1.4% in this revision. The Pricing Index rose to +3.9% from +3.5% first reported, providing another signal that inflation is not yet finished with this economy. PCE quarter over quarter on core (stripping out food and energy prices) also came in higher than expected at +4.3%.
The takeaway here is that the Fed — omnipotent in our current economic outlook — is not going to be reversing interest rates anytime soon. These types of figures, while they do speak to a relatively robust domestic economy, demonstrate the stickiness with which inflation adheres in our current environment. Also, these numbers show that we are well off peak inflation, and here’s our silver lining: in Q2 2022 we saw a Pricing Index at +9%; for PCE core q/q it was +6%. We’ve clearly cooled off from those feverish levels.
Today we’ll hear from Fed Presidents Raphael Bostic from Atlanta and Mary Daly from San Francisco to add a little color here, and to help improve speculation on whether a 25 bps hike in the Fed’s March 22nd meeting is in the cards, or whether pesky inflation metrics like the one just reported will compel the Fed to ratchet tighter, near-term, by 50 bps. The reasoning here is we’re very likely moving up 50 bps (at least) before the Fed pauses; the question is whether we get there sooner or keep pace.
Initial Jobless Claims came in lower than expected this morning to 192K, which is 5000 claims fewer than anticipated, and down 3000 from the upwardly revised 195K the previous week. Continuing Claims also slid lower to 1.654 million (a week in arrears from new claims) from 1.696 million the week prior. For all the talk about corporate layoffs, now reaching beyond the tech industry, we’re sure not seeing it in these jobless claims data. Common wisdom is workers that are currently being laid off are finding new jobs right away; this would again speak to the strength in the overall labor market.
Questions or comments about this article and/or its author? Click here>>
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Q4 GDP Now +2.7%; Jobless Claims Slide Again
Thursday, February 23rd, 2023
Two sizable pieces of information for the market to digest are out this morning: Weekly and Continuing Jobless Claims, and the first revision to Q4 Gross Domestic Product (GDP). The initial results seeing a pullback in early trading gains, from +100 points on the Dow to +40 points now, +25 on the S&P 500 to +12 now, and from +125 points on the Nasdaq to +90 right now.
Q4 GDP posted a still-healthy +2.7%, though this is down 20 bps from the initial print. The biggest hit came from Consumption, which unwound from +2.1% originally reported to +1.4% in this revision. The Pricing Index rose to +3.9% from +3.5% first reported, providing another signal that inflation is not yet finished with this economy. PCE quarter over quarter on core (stripping out food and energy prices) also came in higher than expected at +4.3%.
The takeaway here is that the Fed — omnipotent in our current economic outlook — is not going to be reversing interest rates anytime soon. These types of figures, while they do speak to a relatively robust domestic economy, demonstrate the stickiness with which inflation adheres in our current environment. Also, these numbers show that we are well off peak inflation, and here’s our silver lining: in Q2 2022 we saw a Pricing Index at +9%; for PCE core q/q it was +6%. We’ve clearly cooled off from those feverish levels.
Today we’ll hear from Fed Presidents Raphael Bostic from Atlanta and Mary Daly from San Francisco to add a little color here, and to help improve speculation on whether a 25 bps hike in the Fed’s March 22nd meeting is in the cards, or whether pesky inflation metrics like the one just reported will compel the Fed to ratchet tighter, near-term, by 50 bps. The reasoning here is we’re very likely moving up 50 bps (at least) before the Fed pauses; the question is whether we get there sooner or keep pace.
Initial Jobless Claims came in lower than expected this morning to 192K, which is 5000 claims fewer than anticipated, and down 3000 from the upwardly revised 195K the previous week. Continuing Claims also slid lower to 1.654 million (a week in arrears from new claims) from 1.696 million the week prior. For all the talk about corporate layoffs, now reaching beyond the tech industry, we’re sure not seeing it in these jobless claims data. Common wisdom is workers that are currently being laid off are finding new jobs right away; this would again speak to the strength in the overall labor market.
Questions or comments about this article and/or its author? Click here>>