On October 29, Fed Chair Jerome Powell said, “[W]What do you do if you’re driving in fog? You slow down. “They were referring to the lack of economic data due to the government shutdown. The Fed and financial markets have now been deprived of two monthly employment reports. Add October’s list to the list of shutdown casualties, and that should have lifted some of the fog.
All of this is complicating the debate over whether the Fed will hike for a third time next month in 2025. This also adds drama to the Fed’s speaking engagements in the following days. These include Governor Michael Barr speaking on Artificial Intelligence and Innovation (TUUE), Christopher Waller speaking on Payments (Wednesday), and Stephen Meran (Wednesday) speaking in the UK’s usual fireside chat.
Regional Fed presidents speaking include: John Williams of New York (Wed, Thu), Anna Paulson of Philadelphia (Wed), Rafael Bostick of Atlanta (Wed, Thu), Susan Collins of Boston (Wed), Alberto Muslim of St.
In other words, the Federal Open the mouth The committee will be very sincere this week.
While the government won’t report official data next week, here’s a look at other upcoming data releases to confirm that the economy is still growing and well above the Fed’s 2.0% target.
1. CPI inflation
The Cleveland Fed’s inflation rate now shows that in October, and the inflation rate rose 2.96% and 2.99% y/y, respectively.
In recent months, the CPI core inflation rate has been stuck around 3.00% (chart).
2. Small business survey
Compiled by the National Federation of Independent Business for October (Wednesday), uncertainty is high due to the likely government shutdown (chart). This may continue to weigh on the survey’s labor market index, which we monitor closely.
3. Retail sales
Last week’s index (TUE), covering the end of October, rose 5.7% y/y, confounding economic bears. Odds are good that the next reading will show that consumers are spending and that the breaks are not large enough to weigh on consumer spending (chart).
4. ADP weekly jobs data
Market participants in the National Employment Report will look to its weekly preliminary employment growth estimate (TUE) for any glimpse into labor market conditions amid the economic fog.