Economic Commentary – November 4, 2024

The interest rate decision coming up this Thursday by the Federal Open Market Committee (FOMC) of the Federal Reserve is front-and-center, especially following a number of mixed signals in the recent economic data. October's nonfarm payrolls growth of all of 12,000 jobs was a surprise to everyone; strikes and hurricanes certainly played a role, but the number was so inconsistent with other data that one wonders if something went awry on a broad swath of data collection (coming after the whoppingly large number in September, suspicions abound.)   Manufacturing employment reported from other sources actually accelerated, personal income and spending grew more than expected in September, and average hourly earnings rose nicely in October, well ahead of inflation. Inflation in the US is now running quite close to the Fed's target of 2%, although data from purchasing managers has indicated a sharp uptick in prices paid by many manufacturers in September; shipping problems in the Persian Gulf, the Red Sea, and the East Coast (now, there's a combination!) being the possible culprit. Throw this all together, and it seems likely that the Fed will cut rates another 25 bps, particularly given the Fed's fondness for data-driven myopia and what should then be a residual concern about labor markets. Most certainly, 50 bps is not on the table at the moment and there has been some fear that the Fed wouldn't cut at all, a diminished but not eliminated possibility.

Data to Watch:

1. Institute of Supply Managers (ISM) and S&P Global Purchasing Managers Indices for October, with a special focus on Services, released Tuesday, Nov. 5
2. Mortgage Bankers Association (MBA) US Mortgage Applications for Nov. 1, released Wednesday, Nov. 6
3. US Q3 Nonfarm Productivity (preliminary), released Thursday, Nov. 7
4. Federal Reserve Interest Rate Decision and Press Conference, Thursday, Nov. 7

Suggested Reading:

1. Move over Black Friday: Consumer interest in ‘Travel Tuesday’ soars
2. With Oil Prices Weak, OPEC Plus Postpones Increases Again
3. The Mysterious Fees Inflating Your Grocery Bill

 

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