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The big economic news of this week is finally here: the Consumer Price Index (CPI) for December. Results are decidedly warmer than had been expected on all metrics, but nothing apparently too dire. Pre-market futures dropped into negative trading territory immediately upon the report hitting the tape, but again without anything too alarming: the Dow is -42 points, the S&P 500 is -6 and the Nasdaq -5 points at this hour.
December CPI on headline, month over month, was 10 basis points (bps) hotter than expected, +0.3%, and a jump from the previous month’s +0.1%. It’s the highest print since September of 2023. Stripping out volatile food and energy prices, the core CPI read month over month also came in at +0.3%, as expected and in-line with the previous month’s total.
Year over year CPI is also known as the Inflation Rate, and here we come in warmer as well: +3.4% — 20 bps higher than expected, and 30 bps above November’s +3.1% (which was the lowest print since June’s +3.0%). That’s not what investors were hoping for, but let’s get some perspective: back in January of 2023, we were notching the Inflation Rate was up at +6.4%. Clearly we’ve come a long way. (Though not far enough: +3.4% is still some distance from +2.0%, the Fed’s optimum level of inflation.)
Core CPI year over year also ticked up from expectations to +3.9%, but this is still 10 bps lower than the previous month’s read. Not only that, but this is the first sub-4% core CPI year over year since May 2021, back when prices were beginning to zoom northward as the Great Reopening was getting started following the Covid pandemic. We know just by looking at the graphs that these numbers don’t often progress in a steady line up or down, so whether we stay below +4% over the next month or two has yet to be determined. But we do have demonstrative proof that the Fed’s interest rate levels are having the desired effect, in a general sense.
Initial Jobless Claims, meanwhile, continue to stay unexpectedly low: 202K new claims were filed last week, below the 210K anticipated and 1000 fewer than the previous week’s slight upward revision. We’ve spent the past couple months between 200-220K initial claims, which is among the lowest levels we’ve seen in the past year. Recall last summer we were ratcheting up new jobless claims above 260K, looking like the labor market was likely to experience major challenges. Apparently, this was a false alarm.
Continuing Claims, which had more recently appeared to mount challenges for the domestic workforce, is also coming in lighter than expected: 1.834 million, notably down from the upwardly revised 1.868 million the previous week, and the lowest tally since the final week in October. By mid-November, we were up above 1.9 million longer-term jobless claims, looking as if we were headed to 2 million with an arrow, but we’ve since settled nicely back. American employment continues to be a strong point in our current economy.
Now, bring on Q4 earnings reports! Friday morning delivers the biggest of the big banks, including JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) , as well as Delta Air Lines (DAL - Free Report) and UnitedHealth (UNH - Free Report) . Consider this a sampler plate of what’s to come in the following month or so — the next set of data points helping sort the tea leaves for future economic policy. For now, the Fed won’t be convinced to cut interest rates based on today’s CPI or jobless claims data. We’ll see if Q4 earnings have a different slant.
Image: Bigstock
CPI Warmer than Expected; Jobless Claims Stay Low
The big economic news of this week is finally here: the Consumer Price Index (CPI) for December. Results are decidedly warmer than had been expected on all metrics, but nothing apparently too dire. Pre-market futures dropped into negative trading territory immediately upon the report hitting the tape, but again without anything too alarming: the Dow is -42 points, the S&P 500 is -6 and the Nasdaq -5 points at this hour.
December CPI on headline, month over month, was 10 basis points (bps) hotter than expected, +0.3%, and a jump from the previous month’s +0.1%. It’s the highest print since September of 2023. Stripping out volatile food and energy prices, the core CPI read month over month also came in at +0.3%, as expected and in-line with the previous month’s total.
Year over year CPI is also known as the Inflation Rate, and here we come in warmer as well: +3.4% — 20 bps higher than expected, and 30 bps above November’s +3.1% (which was the lowest print since June’s +3.0%). That’s not what investors were hoping for, but let’s get some perspective: back in January of 2023, we were notching the Inflation Rate was up at +6.4%. Clearly we’ve come a long way. (Though not far enough: +3.4% is still some distance from +2.0%, the Fed’s optimum level of inflation.)
Core CPI year over year also ticked up from expectations to +3.9%, but this is still 10 bps lower than the previous month’s read. Not only that, but this is the first sub-4% core CPI year over year since May 2021, back when prices were beginning to zoom northward as the Great Reopening was getting started following the Covid pandemic. We know just by looking at the graphs that these numbers don’t often progress in a steady line up or down, so whether we stay below +4% over the next month or two has yet to be determined. But we do have demonstrative proof that the Fed’s interest rate levels are having the desired effect, in a general sense.
Initial Jobless Claims, meanwhile, continue to stay unexpectedly low: 202K new claims were filed last week, below the 210K anticipated and 1000 fewer than the previous week’s slight upward revision. We’ve spent the past couple months between 200-220K initial claims, which is among the lowest levels we’ve seen in the past year. Recall last summer we were ratcheting up new jobless claims above 260K, looking like the labor market was likely to experience major challenges. Apparently, this was a false alarm.
Continuing Claims, which had more recently appeared to mount challenges for the domestic workforce, is also coming in lighter than expected: 1.834 million, notably down from the upwardly revised 1.868 million the previous week, and the lowest tally since the final week in October. By mid-November, we were up above 1.9 million longer-term jobless claims, looking as if we were headed to 2 million with an arrow, but we’ve since settled nicely back. American employment continues to be a strong point in our current economy.
Now, bring on Q4 earnings reports! Friday morning delivers the biggest of the big banks, including JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) , as well as Delta Air Lines (DAL - Free Report) and UnitedHealth (UNH - Free Report) . Consider this a sampler plate of what’s to come in the following month or so — the next set of data points helping sort the tea leaves for future economic policy. For now, the Fed won’t be convinced to cut interest rates based on today’s CPI or jobless claims data. We’ll see if Q4 earnings have a different slant.
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