A Blurred Lines Economy

Week in Review: Jan. 30-Feb. 3

The economic data from this week reminds me of Blurred Lines, the 2013 hit song by Robin Thicke.

First: we’re getting seriously mixed signals. Some economic segments have cooled, pointing toward a looming recession. Others, like the labor market, are hotter than the surface of the sun.

Second: Blurred Lines did not age well. After this week of data, I’m afraid some economic forecasts from 2022 might not age well either.

Monday

Gas Prices

Gas prices rose for the fifth straight week, up to $3.594/gallon. That’s still the highest price since the end of November.

TSA Checkpoint Travel Numbers

Travel numbers for the week ending 1/31/23 are just below 2020 levels and just above 2019 levels. Safe to say travel volumes are roughly back to normal.

Tuesday

Employment Cost Index

Compensation costs increased 1.0% during the fourth quarter and 5.1% over the entirety of 2022. After adjusting for inflation, compensation costs fell 1.3% during 2022. So it looks like 1) employer costs are increasing at a slightly slower pace than inflation and 2) the pace of increases is slowing but remains pretty high.

Home Prices

Two measures of home prices—the S&P Corelogic Case-Shiller and the FHFA—came out on Tuesday, and both show that home prices declined in November 2022 but were still higher than in November 2021. Sounds about right.

Conference Board Consumer Confidence

This measure of consumer confidence declined in January. Consumers felt a little bit better about the present moment, but a little bit worse about the future. According to Conference Board, the measure of short-term expectations “is below 80, which often signals a recession within the next year.”

Wednesday

Fed Interest Rate Decision