Week In Review 4.12.2019

Inflation– Headline consumer prices (CPI) rose 0.4% in March, higher than expected, due primarily to a sharp rebound in energy prices. Core CPI, which excludes volatile food and energy prices, rose a more modest 0.1%. Y/Y, core CPI, the better measure in our opinion, slipped -0.1% to 2.0%. Headline business prices, (PPI), also rose in March, up a seasonally adjusted 0.6%. Core PPI posted a much softer 0.3% March gain. Like core CPI, core PPI rose just 2.0% Y/Y. On balance, economic data may be slowing, but both consumer and business inflation remains stable.

US Factory Orders fell an expected -0.5% in February. Durable goods orders, which account for about half of all factory orders, fell -1.6%. Excluding aircraft and other transportation equipment, core durable goods orders have slipped a modest -0.1% in two of the last three factory reports. Conversely, core non-durable goods orders—items meant to last less than three years, rose 0.6%. All told, manufacturers are still expanding, but they’ve turned more cautious recently in response to trade tensions, slowing global growth, and a stronger dollar.

Small Business Optimism rose 0.1 points to a 101.8 reading in March. While the NFIB Small Business Optimism index has fallen from its peak, optimism remains elevated, and businesses continue to report expansion plans.

Consumer Sentiment ticked lower in April with the survey’s results suggesting that American households believe that the impact of tax cuts may now have run its course.