Yahoo Finance PCE Stays Healthy, Durable Goods Drop
Friday, December 23, 2022
Pre-market futures slipped into negative territory on the release of new economic data ahead of today’s opening bell — but then reversed course mere minutes later. November Personal Consumption Expenditures (PCE), oft-cited by voting Fed members, including Fed Chair Jay Powell, came in at +0.4% — a gain of 10 bps month over month. Stripping out volatile food and energy costs, the “core” read brings us +0.2%, down 10 bps from the upwardly revised +0.3% for October.
That’s income; spending gained +0.1% last month, though this is down big from October’s +0.9%. What this tells us — at a glance, anyway — is that holiday shopping this year was pulled forward to mid-fall; likely this was based on retailers not being caught with short supply like they were last year. It also tells us that at least some aspects of our long-suffering supply chain issues have been solved, at least for this year’s retail commerce.
The Deflator, month over month — a key indicator for the Fed in quantifying monetary policy — rose +0.1% for November. This is well off the hot June high +1.0%, indicating that, from yet another angle, inflation is cooling down. Year over year, the Deflator came in at expected at +5.5%, down 150 bps from June. Core deflator month over month was also in-line at +0.2%, down from April’s high +0.6%. More evidence things are progressing in the right direction, albeit slower than we’d prefer.
Preliminary (subject to revision) Durable Goods Orders for last month sank nearly twice as low as expected: -2.1% from the -1.1% consensus. This is the lowest monthly read since the Covid-ravaged April 2020 — not a good sign, unless we’re looking for bad news to be good news. Ex-defense, orders were down -2.6%, though ex-Transportation this figure moves up to +0.2%. Core capital orders, non-defense, ex-aircraft (a proxy for “normal” business expenditures) was also +0.2%, slightly higher than expected.
Shipments came in somewhat better than anticipated: -0.1% month over month, whereas -0.3% was expected — in any case, shrunken notably from October’s +1.4%. Again, consider holiday seasonality with these numbers; hotter retail spending (thus constituting greater need for shipments) for shopping season tends to distort these figures. We’ll see a “purer” print this time a month from now.
Pre-markets have been flipping and flopping all morning; apparently, this data isn’t bringing the masses of investors to any clear conclusions today. Perhaps that will change with the University of Michigan’s consumer sentiment survey for December due after the opening bell. We’ll also get 5-year inflation expectations from the same folks, as well as New Home Sales for November, widely expected to come in lower month over month.
Volumes ought to be rather low, if we go by history. It’s Christmas weekend, after all. Which reminds me: Ahead of Wall Street, and Zacks.com overall, will be off Monday in observance of the holiday. We will return Tuesday to close out the year, hopefully with that long-sought “Santa Claus Rally” (but who really knows?). Also, markets close early today: 1pm ET. Finally, Happy Holidays and Merry Christmas to everyone!
Questions or comments about this article and/or its author? Click here>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
