Retail Sales, Housing Stats, & Inflation (obviously)

Week in Review: Nov 14-18

This week was loaded with meaningful economic data releases, most of which flew under the radar. Don’t blame the radar, which was overwhelmed by the dust settling on midterms, the collapse of FTX, and the Titanic-like happenings at Twitter. Oh, and an actual missile, which landed in NATO-member Poland on Tuesday but turned out to be a Russian-made air-defense missile fired by Ukraine. Remember that?

Monday

Cass Freight Data

Cass Information Systems publishes a few different measures of the U.S. truck transportation industry. In October, freight rates fell 4.3%, which is the third decline in the past four months. The Cass Truckload Linehaul Index, which isolates truckload costs from fuel and accessorials (don’t feel bad if you don’t know what that means; I didn’t either), fell for the fifth straight month and is now at its lowest level since 2021. Both the number of shipments and the total amount spent on shipments has now fallen for two straight months.

What should you take from this? Demand for stuff is falling, so there’s less demand for shipping services. FedEx just announced furloughs, which is unheard of heading into the holiday season. As Americans buy fewer things, that should allow prices to fall, or at least rise at a slower rate, which takes us to:

Tuesday

Producer Price Index (PPI)

This measure of inflation, which looks at the change in prices received by domestic producers, came in cooler than expected in October. Final demand PPI (the broadest category) increased just 0.2% for the month and is up 8% year over year. 8% annual inflation is obviously way too high, but it’s also the lowest level since July 2021. The details of this data release look even better.

Goods prices increased 0.6% for the month, but that’s entirely due to food (+0.6%) and energy (+2.7%). Removing those two categories, goods prices actually fell 0.1% in October—the first monthly decline since May 2020—after remaining unchanged in September (remember that we like to look at price increases less food and energy because those two categories are volatile).

Services prices fell 0.1% for the month, with the two largest components, trade (-0.5%) and transportation and warehousing (-0.2%), both declining.

This is encouraging and, along with last week’s CPI data (which you can read about in last week’s review), suggests we’re past peak inflation. For what it’s worth, I think we should wait for another month or two of data before officially declaring that the worst of inflation is behind us.

Wednesday

Retail Sales