1Michael Feroli (1-212) 834-5523michael.e.feroli@jpmorgan.comJPMorgan Chase Bank NADaniel Silver (1-212) 622-6039daniel.a.silver@jpmorgan.comMurat Tasci (1-212) 622-0288murat.tasci@jpmchase.comNorth America Economic ResearchGlobal Data Watch19 January 2024J P M O R G A Nsure to increase 0.22% month on month, which would take the year-ago reading down from 3.2% to 3.0%. While prog-ress continues to be made in bringing core inflation back down toward the Fed�s 2% goal, Fed officials appear in no rush to cut rates. Notably, this week Fed governor Waller indicated that while policy rates can probably come down this year, the decision to lower the funds rate should be “carefully calibrated and not rushed.� We heard this as leaning against a move as soon as March and we continue to look for the first cut at the June FOMC meeting. Monetary policy hasn�t been the only show in town this week. Congress passed last-minute funding for government agencies that otherwise would have closed this weekend. The short-term patch sets up another funding battle next month. A deal may be in the works to couple an extension of two expiring business tax benefits with a restart of the expanded child tax credit. But news headlines suggested that the two sides were further from a deal to couple Ukraine aid with border reform. Next week is about numbers, not words: Fed speakers will be in their blackout period ahead of the late January FOMC meeting. Instead, attention will turn to the first look at 4Q GDP, and the December reading of the Fed�s preferred infla-tion gauge, core PCE. Retail sales: use your illusionThe December retail sales report beat expectations, with the headline up 0.6% in December and sales for the important control group up 0.8% that month (Figure 1). Revisions for the control group were also modestly positive for both November and October. On the whole, this report shows more momentum for consumers than we (and the consensus) had been anticipating late last year. %samrMonthly changes in "control" retail sales-1.0-0.50.00.51.01.52.020222023%ch, m/mFigure 1: Monthly changes in "control" retail salesSource: Census Bureau, J.P. MorganIt now looks like real consumption rose about 0.3% in December and was up around 2.5% saar in 4Q. There are rea-sons to think that the underlying trend is not as strong as these numbers imply on the surface, as the increase in retail spend-ing during the holiday season was lackluster before seasonal •December retail sales capped off a solid holiday shop-ping season, albeit with some caveats•Housing appears to be getting a modest lift from the recent decline in mortgage rates•Even with progress on inflation, Fed officials look to be in no hurry to cut rates•Next week brings the first look at 4Q GDP (2.2% saar) and December core PCE inflation (0.22%m/m)The economic data released this week point to a...
