Inflation, Retail Sales, & More

Week in Review: Apr. 10-14

Conventional wisdom says it takes 12-18 months for interest rate increases to start to affect the economy, and we’re just over the 12 month mark from the first hike. That seems to be playing out; inflation finally looks to be cooling down (Wednesday and Thursday), but soft retail sales data (Friday) are a big cause for concern.

Monday

Gas Prices

Gas prices increased by about $0.10/gallon during the week ending April 10. That’s the second straight increase, but prices are still down about $0.49/gallon on a year-over-year basis.

TSA Checkpoint Travel Numbers

Travel numbers for the week ending 4/11/2023 slipped back below 2019 levels, but only by 1.3%. As we’ll see with Wednesday’s inflation data, airfares are soaring, and that likely has a marginal effect on traveler numbers.

Tuesday

NFIB Small Business Optimism Index

This measure of small business optimism slipped a little lower in March. About one in four small business owners cite inflation as their biggest problem, which is slightly fewer than in February. Broadly, small business owners are pretty dour, and in March they became more pessimistic about sales, whether it’s a good time to expand, their plans to increase employment and capital expenditures, and credit conditions. I think credit conditions (which this index has at their lowest point since shortly after the 2008-10 recession) are the most important part of this release; it looks like the banking situation has had a tightening effect.

Global Supply Chain Pressure Index

This measure suggests that supply chain pressures (i.e., things that make supply chains worse) are as low as they’ve been since November 2008. This checks out with anecdotal information and other measures related to supply chains.

Wednesday

Consumer Price Index