Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation figure, was down sequentially to +4.6% versus the prior year. The Fed Funds rate of 5.0% has now gone above this inflation metric as it has in every other cycle. Many did not believe this would be possible without major damage to asset markets.
The Atlanta Fed GDPNOW has gone from 3.5% growth in the first quarter to a forecast of just 1.5% in a couple weeks.
- Personal income for February was weaker than expected.
- ISM Manufacturing missed expectations and new orders remain weak at 44.4.
- ISM Services, which has been volatile of late, was 51.2 and well below expectations. New orders fell from 62.6 to 52.2.
The labor market data took a noticeable turn to the south this week as job openings fell significantly. Job cuts via the Challenger, Grey, and Christmas Survey have surged to 270,000 over a three- month span. The series is only a decade old, but this is well above normal. ADP reported private job growth of 145,000, again below expectations. Nonfarm payrolls are reported Friday and will garner extra attention given other reports, but there is a lot of smoothing in this series and large changes are unlikely.