“Any idiot can face a crisis – it’s day to day living that wears you out.” – Anton Chekhov

1. US Retail Sales Slide by Most in a Year in Broad-Based Decline — US retail sales fell in December by the most in a year, suggesting consumers are losing some of the resilience that’s kept the economy growing in the face of rapid inflation and steep Federal Reserve interest-rate hikes.
The value of overall retail purchases decreased 1.1% in December after a downwardly revised 1% drop in the prior month, Commerce Department data showed Wednesday. Excluding gasoline and autos, retail sales fell 0.7%. The figures aren’t adjusted for inflation. inflation has shown more consistent signs of slowing in recent months, putting the Fed on track to again slow the pace of interest-rate hikes. The central bank is expected to raise rates by a quarter point when it meets in two weeks.
2. US Producer Price Index Declines by Most Since Start of Pandemic — The producer price index for final demand fell 0.5% last month, the most since April 2020, and was up 6.2% from a year earlier, Labor Department data showed Wednesday. The median estimates in a Bloomberg survey of economists called for the index to fall 0.1% from a month earlier and rise 6.8% from December 2021. The monthly decline was driven by a plunge in goods prices, notably energy and food. Excluding those components, the so-called core PPI rose 0.1% in December and 5.5% from a year earlier.
3. Fed’s Brainard Favors High Rates for Some Time to Cool Inflation — Federal Reserve Vice Chair Lael Brainard said interest rates will need to stay elevated for a period to further cool inflation that’s showing signs of slowing but is still too high. “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis,” Brainard said in prepared remarks for a University of Chicago Booth School of Business event. Brainard said that economic data in the past few months shows cooling consumer demand and wages and tighter financial conditions, all welcome outcomes for policymakers trying to rein in inflation that last year surged to a 40-year high.
4. Treasury Has About $500 Billion of Headroom After Debt Limit Hit — the Treasury Department has about $500 billion of extraordinary measures available that will allow the US to dodge a payments default as Congress works out an agreement on raising the debt limit, which the nation hit late last week.
Treasury Secretary Janet Yellen notified congressional leaders late last week that her department would be deploying two special accounting maneuvers to avoid breaching the debt limit. The Treasury later released a list of the extraordinary measures available, with some figures on how much financial space they offer. The initial two steps taken can free up about $350 billion of extra borrowing authority through early June, according to a Jefferies analysis of data from the department. The initial measures involve changes for two government-run funds for retirees. Later in June, a one-time move would then become available allowing the Treasury to suspend reinvestment in the Civil Service Retirement and Disability Fund, potentially creating an additional $143 billion in headroom, according to the Treasury’s release.
5. U.S. Existing-Home Sales Slid Last Year as Interest Rates Surged — Sales of previously owned homes, which make up most of the housing market, slid 17.8% in 2022 from the prior year to 5.03 million, the National Association of Realtors said Friday. The pandemic-fueled housing boom of 2020 and 2021 carried over to the start of last year. Then the Federal Reserve’s effort to cool the economy and curb inflation by raising interest rates flattened housing-market activity as borrowing rates more than doubled. In October, mortgage interest rates climbed to 7.08%, a two-decade high. More recently, mortgage rates have declined. The average rate on a 30-year fixed mortgage fell to 6.15% this week, the lowest rate since September. Mortgage applications for home purchases rose 25% on a seasonally adjusted basis in the week ended Jan. 13 from the prior week, according to the Mortgage Bankers Association.

The week ahead — Economic data from Econoday.com:

This entry was posted on Monday, January 23rd, 2023 at 3:02 pm and is filed under Weekly Summary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.