Economic growth continues despite downbeat data

Summary

United States: Economic growth continues despite downbeat data

• Economic data were downbeat this week, as downward revisions took some of the shine out of the marquee headline numbers. Durable goods orders declined, consumer confidence took a dip and the PCE deflator accelerated, bringing real personal spending into the red. Despite the somewhat weak start to Q1, economic growth continues to trek along.

• Next week: ISM Services (Tue.), Trade Balance (Thu.), Employment (Fri.)

International: Eurozone inflation stays sticky

• Eurozone disinflation continued in February; however, CPI surprised to the upside last month, leaving markets questioning when the ECB will shift to rate cuts. Sticky inflation and elevated wage growth, in our view, is now likely to keep the ECB on the sidelines until the middle of 2024.

• Next week: Bank of Canada (Wed.), European Central Bank (Thu.), Mexico CPI (Thu.)

Credit market insights: Mostly good in the neighborhood

• Earlier this month, the Federal Reserve Bank of New York released its Quarterly Report on Household Debt and Credit encompassing the fourth quarter of 2023. The level of household debt outstanding sits $3.4 trillion above where it stood prior to the COVID-19 pandemic, or about 24% higher. Households have by and large been able to service their debt obligations even as the Fed’s tightening cycle has raised interest expenses on households.

Topic of the week: “Super core”: The inflation measure du jour

• For much of this cycle, “super core” inflation was the talk of the town. Since its introduction, however, attention on the "super core" from Fed officials, analysts and market participants has seemed to dwindle. Why did “super core” ascend into the limelight and then fade from view? This week, we chronicle the rise and fall of interest in the "super core" and provide an update to its current run-rate.

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