Succinct Summation of the Week's Events

Succinct Summation of the Week's Events:

Positives,

1)The headline December CPI gain of .4% m/o/m and 2.9% y/o/y was spot on with the forecast. Energy prices jumped by 2.6% in the month and expect more gains in the months to come though still down .5% y/o/y. Food prices gained another .3% m/o/m and by 2.5% y/o/y. Specifically for food at home prices, they rose .3% m/o/m and 1.8% y/o/y. For those eating out, prices were up .3% m/o/m and by 3.6% y/o/y. The core rate grew by .2% m/o/m and 3.2% y/o/y, both one tenth below expectations with services inflation offsetting no inflation in core goods prices.

2)December PPI gained .2%, two tenths below expectations after a .4% pop in November. The core rate was flat after a two tenths gain last month. The y/o/y gains for each are 3.3% and 3.5% vs 3% and 3.5% in the month before. No change in services offset another gain in goods prices.

3)Core retail sales in the key holiday month of December where most of the holiday sales took place because of the late November Thanksgiving rose .7% m/o/m which was 3 tenths above the estimate and comes after a .4% rise in November. The y/o/y gain was 4.1%.

4)The Philly manufacturing index ripped higher to +44.3 in January from -10.9 in December. There was a big jump in new orders and prices paid rose to the highest since December 2022 and those received to the most since January 2023. The overall six month business outlook improved to 46.3 from 33.8 and after the post election spike to 53.9 in November. Capital spending plans also gained nicely to 39 from 22.2.

5)The NFIB Small Business Optimism index for December jumped again to 105.1 from 101.7 and is now up 11.4 pts in the two months post election. The bottom line from the NFIB is as you would expect it to be, "Optimism on Main Street continues to grow with the improved economic outlook following the election. Small business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business polices and legislation in the new year." Also of note, inflation remained the "single most important problem in operating their business (higher input and labor costs), unchanged from November and leading labor quality as the top issue by one point."

6)Housing starts in December surprised to the upside totaling 1.499mm, well above the estimate of 1.327mm. Single family starts grew by 34k units m/o/m to 1.05mm while the very volatile multi family category jumped to 449k from 278k in November and vs 401k in October. Permits for single family homes rose to 992k from 976k and that is the most since February 2024. They fell to 491k from 517k for multi family but up from 448k in October.