Retail Sales Insights and the Shifting Economic Climate | Episode 180 | 10-11-24

Could the rising tide of inflation sink consumer confidence for good? Join us as we dissect the latest economic indicators, including the Consumer Price Index and Producer Price Index, and uncover why the Federal Reserve may have a tough road ahead dealing with sticky inflation in the service sector and surging food prices. We break down what the numbers reveal and explore the implications for future monetary policy. With inflation expectations creeping upward and consumers feeling the pinch, understanding these trends could be crucial for navigating the current economic climate.

Despite an optimistic stock market, consumer confidence takes a hit with a weaker-than-expected outlook for October. We explore the disconnect between market performance and consumer sentiment, and dive into the upcoming economic data releases, including the pivotal retail sales report. As we anticipate a week filled with critical insights, stay informed with our comprehensive analysis that aims to keep you ahead in understanding what these shifts mean for your financial future.

Well, we got a little bit better inflation data today compared to yesterday. It is Friday, october 11th, and after we got the consumer price index yesterday, which came in hotter than expected, today we got the producer price index and what we saw at the headline level that was actually flat, so that was a little bit better than expected. But when you look at the core level so this is excluding food and energy that was up two-tenths of a percent. It did match the expectation, so there weren't any major surprises there. But when you look on a year-over-year basis and this is what the Fed likes to look at the headline actually rose from 1.7 to 1.8, and the ex-food and energy actually rose from 2.6 to 2.8.

Some of the areas that are still a problem here for inflation are often things that we discuss. Food prices jumped 1% in September, so they're growing 3.2% now on a year-over-year basis. The service sector and this is the area that the Fed considers sticky this is up now two-tenths and rising 3.1% on a year-over-year basis. Most of the weakness in this report was led by energy and that was a similar situation in the Consumer Price Index yesterday. Now, shortly after we got the Producer Price Index, we also got information on the consumer and this is consumer confidence. It's the preliminary reading for the month of October. And consumer confidence. It's the preliminary reading for the month of October and consumer confidence came in much weaker than expected and the reason behind it was that the consumers continue to talk about high cost of living. So they're seeing what we're seeing.

The markets aren't really seeing this. Markets are up pretty big today, but they're seeing exactly these prices that we're seeing the sticky inflation in the service side now, with food prices again, and what we saw in that report was that the one-year inflation expectations actually rose from 2.7 to 2.9. So inflation expectations are rising. Inflation is kind of stalled the progress that it's made. So the Fed's going to be paying close attention to this. That's all we have for this week, but next week's a big week when it comes to economic data. We've got a lot of reports. The main one will be the retail sales report that we will get on the 17th. If you like this, please hit the subscribe. Share with friends and families. If you also want to hear any of our older podcasts, you can find all of our podcasts on marketswithmegan. fm. Thank you.