Weekly Market Update: October 24, 2016
What We Learned Last Week
Consumer Price Index (CPI) inflation is running about 1.5 percent on a year-over-year basis; core CPI is 2.2 percent. Inflation readings based on the chain Personal Consumption Expenditures price measures—the more comprehensive measure the Fed takes is cue from—are running about 0.5 percentage point lower, reflecting softness in healthcare costs that may be passing.
A majority of states reported a decline in jobless claims in the latest week. Four states, including Kentucky, New York, California and North Carolina, accounted for three quarters of the increase for all who reported a rise in claims. The tallies for California and New York are within the normal range of weekly noise. States in the path of Hurricane Matthew accounted for 20 percent of the rise for all who reported increases. Layoffs in the energy belt have fallen back with the trends for all other states.
What We Expect to See in the Week Ahead
The economic calendar doesn’t hold a lot of suspense for economy watchers, but reports like the initial Gross Domestic Product (GDP) growth estimate for 3Q—forecast to be up a solid amount—will get a lot of air time with the national election right around the corner. Inventory spending adds uncertainty to GDP estimates, like it did for 2Q, with oil prices swinging.
Jobless claims are likely to settle back over the next couple of weeks as the dislocations caused by Hurricane Mathew subside.
Other reports covering housing, durable goods, manufacturing, trade and labor costs likely will keep the idea of a Fed rate increase in December alive.
View our economic commentary disclaimer.