- Inflation rise ate into wages.
- Retail spending slowed though higher than a year ago.
- New construction is on the rise.
Two full weeks into January, most of the latest data reflects key trends in December.
Inflation eats into wages: Inflation increased modestly in December, primarily from higher energy prices and from big increases in health care insurance. Average weekly earnings did not see real growth for the first time in 32 months as a result of weaker wage growth, fewer hours worked, and higher inflation.
Spending slows: Retail spending is also slowing down, but December did see a solid gain in retail sales over a much weaker December 2018. Consumer spending represented 90% of economic growth in 2019. Slowing spending will produce less growth in 2020.
Construction hikes: New construction for December made headlines due to a big jump in the starts SAAR, which was mainly influenced by weather. New residential construction is indeed up year over year and is boosting economic growth.
Consumer sentiment stable: Consumer sentiment started the year stable and remains up substantially from the start of last year. Negative news about Iran and impeachment has not impacted consumer views so far.
Looking ahead: This week we will get existing home sales and new home sales for December, and we will review auto loan delinquencies and defaults for December as well.