How do CPI, PPI, and retail sales impact you?
- This week’s CPI report shows that despite the significant progress made with inflation coming down from last summer’s highs, we are still nearly double the Fed’s 2% target.
- The surge in energy prices was the driving force behind accelerating inflation data this past month. Higher energy costs can also feed into prices of non-energy goods and services. When they fell until recently, transportation services helped drive tamer core inflation readings, but that could be risky if energy prices keep rising.
- While the shelter index rose for the 40th consecutive month, the increase was a somewhat modest 0.3% last month; rents, however, rose a bit more aggressively, 0.5%. Should shelter prices continue to ease, it would support driving down inflation in the months ahead.
- Retail sales, representing about 1/3 of all consumer spending, continue to maintain strength, climbing for the fifth consecutive month.
- While the consumer sentiment survey showed continued worries regarding the economy, it also found Americans think inflation will continue to slow.
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A LOOK FORWARD1
- This week's biggest news will be the outcome of the Federal Reserve’s decision on the path of interest rates on Wednesday.
How does the Fed’s interest rate decision impact you?
- Some Fed officials have indicated they would like to slow the pace of rate hikes, which could mean looking beyond higher energy costs for now. Elevated rates make it extremely difficult for individuals to afford a home or car and for businesses to finance expansion.
- Futures markets are showing a near-certain 99.0% probability of holding rates steady at a target rate of 5.25-5.50%2.
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BY THE NUMBERS
UAW Goes on Strike Against GM, Ford and Stellantis: The United Auto Workers union hit the picket lines shortly after midnight on September 15th, striking all three Detroit car companies at once for the first time. Bargaining went late into the night, but the two sides remained too far apart to avoid a walkout at the 11:59 p.m. ET deadline. Workers at Ford’s Bronco plant in Detroit, a Stellantis Jeep factory in Toledo, Ohio, and a GM pickup plant in Missouri were instructed to leave their posts, beginning what could be a series of sporadic walkouts done without notice at additional auto factories. The three targeted assembly factories, which combined employ about 12,700 hourly workers, build some of the companies’ highly profitable and sought-after pickup trucks and SUVs. Analysts expect the initial financial impact to be limited if the strike is short, but it could grow the longer the stoppages go on. 4
These are the U.S. states with the highest property taxes: Property taxes can vary by nearly $8,000 for the same-priced home, depending on where you live in the U.S., a new study reveals. New Jersey’s effective tax rate is 2.23%, the highest in all 50 states and the District of Columbia, according to Tax Foundation’s analysis of the Census Bureau’s most recent data. Hawaii is the lowest-taxed state, with an effective tax rate of 0.32%. For a home worth the U.S. median of $416,100, New Jersey homeowners would pay $9,279 in property taxes. In Hawaii, the tax bill for the same home would only be $1,332. The median effective property tax rate for all states and the District of Columbia is 0.91%. Only New Jersey and Illinois have property taxes that are higher than 2%.5 |
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Economic Definitions
Federal Reserve (Fed): The Federal Reserve System is the central banking system of the United States of America.
CPI (headline and core): Consumer prices (CPI) are a measure of prices paid by consumers for a market basket of consumer goods and services. The yearly (or monthly) growth rates represent the inflation rate.
Producer Prices – PPI (headline and core): Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e., prices received by domestic producers for their outputs either on the domestic or foreign market). Initial Jobless Claims: Initial unemployment claims track the number of people who have filed jobless claims for the first time during the specified period with the appropriate government labor office. This number represents an inflow of people receiving unemployment benefits.
Retail Sales: Retail sales (also referred to as retail trade) tracks the resale of new and used goods to the general public, for personal or household consumption. This concept is based on the value of goods sold.
University of Michigan Consumer Sentiment Index: Consumer confidence tracks sentiment among households or consumers. The results are based on surveys conducted among a random sample of households. Target Audience: representative sample of US households (excluding Alaska and Hawaii). Surveys of Consumers collects data on consumer attitudes and expectations summarized in the Consumer Sentiment, in order to determine the changes in consumers' willingness to buy and to predict their subsequent discretionary expenditures. This Index is comprised of measures of attitudes toward personal finances, general business conditions, and market conditions or prices. Components of the Index of Consumer Sentiment are included in the Leading Indicator Composite Index. Unit: Index (Q1 1966=100)
Index Definitions
S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
NASDAQ: The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.
Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
Russell Mid-Cap: Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index.
Russell 2000: The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as of December 31, 1986. The end-of-day value is calculated with a base value of 100.00 as of December 29, 1978.
MSCI EAFE: The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East.
MSCI EM: The MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.
Bloomberg Barclays US Agg Bond: The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
Bloomberg Barclays High Yield Corp: The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.
Bloomberg Barclays Global Agg: The Bloomberg Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.
Bloomberg Barclays Municipal Bond Index: The Bloomberg Barclays U.S. Municipal Index covers the USD-denominated long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds. |
