It was a busy day on the economics front. So let’s review what you missed. 🕵️
Firstly, across the pond, the U.K.’s inflation eased to 10.1%. Prices fell for the third straight month from their October peak of 11.1% but remained well above its central bank’s target. Food prices continued to rise sharply, furthering an already difficult cost-of-living crisis. 🥵
Back in the U.S., the Commerce Department reported that retail sales rose 3% in January, higher than the 1.8% expected. The seasonally adjusted spending increase was the largest since March 2021, rebounding from two straight months of declines. Driving the increase was dining out, autos and parts, and furniture. A strong labor market and resilient consumer spending remain complex challenges for the Fed to tackle in its battle against inflation. 🛍️
U.S. industrial output was flat in January, falling short of the 0.4% gain expected. Additionally, output in December was revised down from -0.7% to 1.0%. Meanwhile, capacity utilization fell to 78.3%, its lowest level since September 2021. Today’s data confirms what we’ve seen elsewhere, that manufacturing activity is in contraction territory. 🏭
The National Association of Home Builders/Wells Fargo Housing Market Index saw its largest MoM increase in ten years. February’s number jumped to 42, which remains below the 50 “threshold” of pessimism/optimism. For context, it hit a low of 31 in December but was at a high of 81 last February. Recent declines in interest rates have buoyed housing demand and confidence, but the housing market remains soft(er)…just as the Fed wants it. 🏘️
Lastly, as discussed yesterday, Biden officially announced his new economic team. As expected, it’s being led by Federal Reserve Vice Chair Lael Brainard, where the veteran will help guide the administration through key elements of its economic agenda. 🧭