By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Lots of data to watch this week, starting with Monday morning’s Institute for Supply Management (ISM) Manufacturing report. Manufacturing has been a laggard since late 2002 until recently, with activity improving sharply the last several months. The ISM survey is expected to come in above 50 (indicating expansion) for the second consecutive month, which hasn’t happened since the fall of 2022. Prices paid are expected to increase, while both employment and new orders are expected above 50, indicating underlying positive momentum.
- On Friday, the February employment report will be released and is expected to show that U.S. employers added jobs at a moderate pace amid government layoffs and growing concerns over consumer spending. The median projection is for payrolls to increase 160,000 (better than January) and the unemployment rate to hold steady at 4%.
- The U.S. Federal Reserve (Fed) meets again in two weeks, and Fed speakers will be on the tapes in numbers this week, prior to the pre-meeting blackout period. The highlight will be Fed Chairman Powell’s speech on the economic outlook, at Chicago Booth’s 2025 U.S. Monetary Policy Forum. He is expected to stress that monetary policy remains data-dependent (keyed on inflation), and the Fed remains patient.
Three Things to Know
- Core personal consumption expenditures (PCE) fell to the lowest level since last summer in January at 2.65%. Core PCE is the Fed’s favored measure of inflation. Service inflation fell to 3.4% while goods inflation increased to 0.6% after nine consecutive months of negative year-over-year gains. (Source: Haver)
- PCE and the Consumer Price Index (CPI) are different in that CPI measures a fixed basket of goods that changes annually while PCE reweights each month to capture changing consumer behaviors. The two also weight housing differently. (Source: BFE)
- The Atlanta Fed’s GDPNow indicator is forecasting first-quarter GDP of -1.5%, while the New York Fed Staff Nowcast is predicting 2.94%. (Source: New York and Atlanta Fed)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.