Still Missing the Mark: January 13 – 17

Inflation remained stubbornly above target in 2024. Here are the five things we learned from U.S. economic data released during the week ending January 17.

Energy goods sparked a pick-up in consumer prices in December. The Consumer Price Index (CPI) rose a seasonally adjusted 0.4 percent, the biggest single-month gain for the Bureau of Labor Statistics stat since last February. Energy prices surged 2.6 percent, reflecting a 4.3 percent jump in gasoline prices. Food prices gained 0.3 percent. Net of energy and food, core CPI increased 0.2 percent in December, its smallest increase since last July. Rising were prices for used cars/trucks (+1.2 percent), new vehicles (+0.5 percent), transportation services (+0.5 percent), shelter (+0.3 percent), medical care services (+0.2 percent), and apparel (+0.1 percent). CPI rose 2.9 percent in 2024, with core CPI growing 3.2 percent over the same period.

Wholesale inflation moderated in December. The Producer Price Index (PPI) for final demand increased a seasonally adjusted 0.2 percent, half of November’s 0.4 percent advance. The Bureau of Labor Statistics measure has risen 3.3 percent over the past year. Core wholesale prices, which net out energy, food, and trade services, grew by a paltry 0.1 percent for the month and 3.3 percent over the past year. Whereas energy PPI jumped 3.5 percent in December, food PPI was off 0.1 percent. Goods PPI rose 0.6 percent but was flat after removing energy and food. Services PPI also was unchanged in December.

Retailers report sales gains in December. Retail and food services sales grew 0.4 percent to a seasonally adjusted $729.2 billion (+3.9 percent versus December 2023). The Census Bureau data series totaled $8.544 trillion for all of 2024, up 3.0 percent from the prior year. Sales at motor vehicle/parts dealers and gas stations increased 0.6 percent and 1.5 percent, respectively. Net of both, core retail sales advanced 0.3 percent in December and 3.8 percent for all of 2024. Sales grew at retailers focused on sporting goods/hobbies (+2.6 percent), furniture (+2.3 percent), apparel (+1.5 percent), and groceries (+0.9 percent). Sales declined 2.0 percent at building material retailers and 0.3 percent at restaurants/bars.

Manufacturing output increased in December but was flat for all of 2024. Manufacturing output increased a seasonally adjusted 0.6 percent during the month. But reflective of the struggles in the sector, the Federal Reserve data series was unchanged compared to December 2023. Durable goods output gained 0.4 percent (with aerospace and primary metals leading the way), while nondurables enjoyed a 0.7 percent boost. Overall industrial production jumped 0.9 percent, with gains for mining and utilities of 1.8 percent and 2.1 percent, respectively. Industrial production increased by a modest 0.5 percent in 2024.

Housing starts jumped in December. The Census Bureau reports that privately owned housing starts rose 15.8 percent to a seasonally adjusted annualized rate (SAAR) of 1.499 million units. Even with the surge, starts remained 4.4 percent below their year-ago pace. Starts rose in three of four Census regions, with starts unchanged in the South. Looking towards the future, issued housing permits slipped 0.7 percent to an annualized 1.493 million (-3.1 percent versus December 2023). Issued permits for single-family homes swelled 3.3 percent in December to 1.05 million. Completions rose 15.8 percent to an annualized 1.294 million, 4.4 percent below year-ago levels.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending January 11, 2025, First-Time Claims, seasonally adjusted): 217000, -14,000 vs. the previous week, +23,000 vs. the same week a year earlier). 4-week moving average: 212,750 (+6.0% vs. the same week a year earlier).
• Import Prices (December 2024, All Imports, not seasonally adjusted): +0.1% vs. November 2024; +2.2% vs. December 2023. Nonfuel Imports: +0.1% vs. November 2024; +2.4% vs. December 2023.
• Export Prices (December 2024, All Exports, not seasonally adjusted): +0.3% vs. November 2024l +1.8% vs. December 2023. Non-agricultural Exports: +0.3% vs. November 2023; +2.2% vs. December 2023.
• Small Business Sentiment (December 2024, Index (1986=100), seasonally adjusted): 105.1 (+3.4 points vs. November 2024; +13.2 points vs. December 2023).
• Monthly Treasury Statement (December 2024—1^st 3 Months of FY 2025, Budget Deficit): -$710.9 billion (+39.4% vs. the comparable FY2024 month).
• Housing Market Index (January 2025, Index (>50 = More Homebuilders View the Housing Market As “Good” than “Poor,” seasonally adjusted): 47 (December 2024: 46; January 2024: 44).
• Business Inventories (November 2024, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.586 trillion (+0.1% vs. October 2024; +2.6% vs. November 2023).
• Treasury International Capital Flows (November 2024, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$115.7 billion (October 2024: +$138.9 billion, November 2023: +$123.4 billion).
• Beige Book

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