Daily update
Daily update
- October US consumer price inflation headlines have two significant factors. Health insurance calculations are changing and are likely to add to the inflation rate—but of course changing how inflation is calculated does not change inflation reality for consumers. And the fictional owners’ equivalent rent data should contribute less to inflation, again without changing reality.
- The inflation reality is that middle-income homeowning US households face a lower inflation rate than the headline implies, and thus have better spending power than the inflation implies. Regional variations also lower the inflation experience for many consumers. That all supports a soft landing scenario. Recent durable goods price deflation and pressure on profit-led inflation suggest no inflation stickiness.
- UK labor market data comes with a health warning issued by the people who compile the data—so few people answer the labor force survey, it comes with a “do not trust” sticker. Experimental data showed an increase in employment (September data also revised up), with median earnings growth a little below 6% y/y.
- Chief Economists Pill and Lane from the Bank of England and the ECB are speaking, but markets seem content in their expectations about policy direction for now. The US House of Representatives is set to vote on attempts to avert a government shutdown.
