USD: Data focus on PCE and GDP – TD Securities
|TD Securities’ Global Strategy Team highlights upcoming US data, expecting December core PCE to rise 0.25% month-on-month and headline PCE 0.27%, leaving annual rates at 2.9% and 2.8%. The bank also looks for Q4 GDP to slow to 2.3% annualized, with risks skewed lower if government consumption falls more than anticipated.
PCE inflation and GDP set tone
"We expect GDP to print 2.3%, while core PCE likely printed at subdued 0.25% m/m."
"PCE inflation likely accelerated in December. We expect core PCE advanced 0.25% m/m due to both stronger goods and services (cons: 0.3%). We look for supercore PCE to go essentially sideways at 0.26% m/m. Headline will be a tad stronger at 0.27% owing to an acceleration in food prices (cons: 0.3%). Our forecast translates to 2.9% and 2.8% y/y for core and headline, respectively (cons: 2.9% & 2.8%)."
"We also expect personal spending grew 0.4% m/m in December—0.1% in real terms—reflecting a moderation in consumption to end Q4 (cons: 0.3%). Both control group and food services retail sales declined in the month. We also expect personal income growth moderated to 0.2% m/m due to weak aggregate payroll income growth (cons: 0.3%)."
"GDP growth likely lost momentum in Q4, growing 2.3% q/q AR after two solid quarters (consensus: 3.0%). We expect the moderation to reflect slowing consumer spending, a sharp contraction in federal government outlays, and adverse net exports. We also expect AI-related investment to continue supporting nonresi fixed investment."
"We flag the downside risk to our forecast if government consumption declines more than we expect due to the government shutdown."
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