A Week of Disappointing Data

Week in Review: Feb. 12-16

The months-long streak of better-than-expected economic data ended this week, with disappointing updates on inflation, retail sales, and residential construction.

Monday

Gas Prices

Gas prices increased for the fourth straight week and are over $3.30/gallon for the first time since the first week of December. Again, prices should keep rising over the next couple of months.

Diesel Prices

Diesel prices jumped more than $0.20/gallon and are over $4.00/gallon for the first time since the first week of December.

TSA Checkpoint Travel Numbers

Americans continue to travel; the number of passengers screened by TSA remains about 5-6% higher on a year-over-year basis.

Tuesday

Consumer Price Index (Inflation)

Inflation was faster than expected in January, according to this measure of consumer prices, and has now accelerated in each of the past three months.

Prices are up 3.1% year over year. That’s still too fast but represents huge improvement from the 6.4% year-over-year rate seen in January 2023.

Why did prices increase so quickly in January? First, shelter (i.e. housing) is up 6% over the past year, and that accounts for more than a third of overall prices. This reflects rents (and what homeowners think they could rent their home for). Most economists expect this to turn over in the coming months, but that’s been the case for the past 18 months and…still waiting.

Beyond shelter, services prices rose significantly faster than goods prices (continuing a recent trend). Medical care and transportation services surged in January, with particularly rapid increases in car insurance prices and air fares.

NFIB Small Business Optimism Index

Small business owner optimism fell in January and has now been below the historical average for 25 straight months. They point to the usual suspects—inflation, labor shortages and worker quality. Take this with a very small grain of salt; after the past few years, I’m not putting much weight on sentiment readings.

Wednesday

Mortgage Applications