Weekly Economic & Financial Commentary: Growing Pains Still Plaguing U.S. Economy

Summary

United States: Growing Pains Still Plaguing U.S. Economy

• Consumer prices, retail sales and U.S. workers quitting their jobs all topped expectations in September. This week’s economic data provided additional evidence that the economy is struggling to find an equilibrium 18 months into the global pandemic.
• Next week: Industrial Production (Monday), Housing Starts (Tuesday), Existing Home Sales (Thursday)

International: U.K. Data: Take the Good with the Bad

• It was another mixed week of news on the U.K. economy. August GDP growth was subdued with a gain of just 0.4% month over month, while supply disruption potentially suggests another modest month for activity in September. Labor market news was more upbeat, and employment in the three months to August rose at the fastest pace since late 2015.
• Next week: China GDP (Monday), U.K. CPI (Wednesday), Eurozone PMIs (Friday)

Interest Rate Watch: Outlook for Fed Rate Hikes: Watch Inflation Expectations

• The inflation rate is clearly above 2% at present, but most Fed policymakers suspect that it will recede next year. As discussed in our most recent U.S. Economic Outlook, we, too, forecast that inflation will recede in 2022, although not as much as most FOMC members expect. But it is the “maximum employment” part of the FOMC’s objectives that we think will delay Fed rate hikes until 2023.

Topic of the Week: COLAs Fizz Up for 2022

• On Wednesday, the Social Security Administration announced that benefits for 2022 would increase 5.9%, the largest boost since 1982, for roughly 70 million Social Security recipients. The increase is a result of the annual cost-of-living adjustment (COLA), which aims to ensure that benefits keep pace with inflation.

Full report here.