Economic Content

Inflation is slowing. The Consumer Price Index (CPI), the core CPI, the Producer Price Index (PPI) and the core PPI, all came in cooler than expectations in October. 

On a m/m basis, CPI was flat (0.0%) as compared to expectations of 0.1%. This resulted in a huge and most welcome drop in the y/y rate from 3.7% in September to 3.2% in October.

The Federal Reserve Bank left the overnight Federal Funds rate unchanges at its September meeting. However, it also signalled that it probaly wasn't finished raising rates for the year.

The Fed also made projections for substantially higher growth and lower unemployment.

The headline numbers from the July employment report are leading many analysts to call it a "Goldilocks" report- a strong labor market, but not too strong. But, as our Senior Economist Dan North states in his latest North Report, a good report today doesn't tell the whole picture of what is going to happen tomorrow. 

Job gains of 187k were less than expectations of 200k, the year-over-year job rate fell from 2.5% to 2.2%, and wage earners are still underwater with inflation rising 17.3% since January 2021, but wages have only risen 12.8%. 

There appear to be clouds on the horizon for the economy.

Pick your number.

The May employment report showed a divergence between the Establishment survey and the Household survey, with the Establishment survey reporting a blow-out number of 339k non-farm payroll (NFP) jobs created vs the expectations of 190k. However, the downward trends over the past 15 months remain intact, and other data in the Establishment survey shows that.