As the second week of September unfolds, market participants and economists are closely eyeing a suite of key economic events. The U.S. economy, amidst the ebb and flow of pandemic recovery, has provided mixed signals in recent months. This upcoming week could offer insights into the pulse of consumer behavior, the resilience of businesses, and the health of the job market.
Wednesday, September 13th: The CPI Watch
The Consumer Price Index (CPI) and its core measure will be in sharp focus. The forecast hints at an acceleration in the CPI to 0.6% for August, up from 0.2% the previous month. This could potentially reignite concerns about inflationary pressures, especially if the figures overshoot expectations.
Year-over-year, while the CPI is expected to rise from 3.2% to 3.6%, the core CPI (which excludes volatile food and energy prices) is predicted to decelerate slightly from 4.7% to 4.3%. An unexpected surge here could prompt the Federal Reserve to reconsider its accommodative stance, leading to potential bond yield movements and equity market volatility.
Thursday, September 14th: The Jobs and Production Story
Initial jobless claims, a litmus test for the labor market’s health, are expected to tick up slightly to 220K from 216K. While these numbers have improved dramatically from the pandemic highs, the uptick would indicate a still uneven recovery.
The Producer Price Index (PPI) offers a glimpse into the production side of the inflation story. With a predicted increase from 0.3% to 0.4% for August, rising production costs could be passed onto consumers, further fueling the inflation narrative.
U.S. retail sales are forecasted to slow down markedly, from 0.7% to a tepid 0.1%. This could signal potential consumer fatigue or increased caution in spending, which could weigh on GDP growth for Q3.
Friday, September 15th: Imports, Production, and Sentiment
Import prices are expected to moderate, with a slight decline from 0.4% to 0.3%. This reduction could be indicative of a less heated global inflation environment or changes in the import mix.
The Empire State Manufacturing Survey is anticipated to present a less negative picture, improving from -19 to -10. Although still negative, an upward trajectory would hint at improving conditions in the New York State’s manufacturing sector.
Industrial production’s projected slowdown from 1.0% to 0.2% could raise eyebrows, potentially signaling that the post-pandemic boom in production might be plateauing.
The static consumer sentiment figure of 69.5, if met, would suggest consumers remain cautious amid current economic conditions.
As always, the devil is in the details. While forecasts offer a guideline, the real implications for markets come from surprises or deviations from these expectations. The collective picture painted by next week’s data will provide fodder for both bulls and bears. Investors are particularly watchful of any data that could hint at prolonged inflation, which would possibly nudge the Federal Reserve into action. On the other hand, signs of sustained recovery, especially in employment and consumer spending, could provide solace that the U.S. economy remains on a strong footing.
Disclaimer: This article is intended for informational purposes only. It should not be considered financial or investment advice. Always consult with a certified financial professional before making any significant financial decisions.