Empire State Manufacturing Survey: Activity Drops Sharply in January The diffusion index for General Business Conditions fell to -43.7 from -14.5 in December.
(…) After falling twenty-four points last month, the general business conditions index shed another twenty-nine points, coming in at -43.7, its lowest level since May 2020.
CONSUMER WATCH
More Americans Focused on Paying Down Debt in NY Fed Survey
Asked what they would do if they got an unexpected 10% increase in income, 38.4% of households said they would use the extra money toward debt payments. That’s the highest reading since August 2016.
Meanwhile the share of respondents who would spend or donate the windfall dropped to the lowest on record since the series began in August 2015.
The results signal increasing financial pressures for US households, who have been relying more and more on credit cards in recent months.
Asked what they would do if faced with an unexpected loss of income, a record share of respondents said they would have to increase borrowing.
Rather than reduce spending…
Americans are actually pretty happy with their finances
Americans overall have a surprising degree of satisfaction with their economic situation, according to findings from the Axios Vibes survey by The Harris Poll. (…
63% of Americans rate their current financial situation as being “good,” including 19% of us who say it’s “very good.” Neither number is particularly low: They’re both entirely in line with the average result the past 20 times Harris Poll has asked this question. (…)
66% think that 2024 will be better than 2023, and 85% of us feel we could change our personal financial situation for the better this year.
(…) a substantial majority of renters are happy renting, with 63% of them saying they’re not interested in homeowning and having a mortgage. (…
More than half of Americans say that if they lost their job tomorrow they’d be OK; that they could find an equivalent or better job quickly; and that “my employers need me more than I need them.” 63% of respondents describe their job security as “a sure thing.” (…)
From The Transcript:
- “The way we see it, the consumer is fine. All of the relevant metrics are now effectively normalized. And the question really, in light of the fact that cash buffers are now also normal, but that that means that consumers have been spending more than they’re taking in, is how that spending behavior adjusts as we go into the new year in a world where their cash buffers are less comfortable than they were.” – JPMorgan Chase ($JPM ) CFO Jeremy Barnum
- “The financial health of our consumers remained strong. While average deposit balances per customer continue to decline from their peak, they remained above pre-pandemic levels as wage growth has more than offset increased spending. Having said that, there are cohorts of customers that are more stressed. Consumer spending remained strong. Credit card spend was up 15% for the year and was remarkably stable throughout the year, with growth rates strong across all categories, except fuel, which was impacted by lower gas prices. Debit card spending was up 1% for the year. Discretionary spend growth slowed from a year ago while non-discretionary spend was stable.” – Wells Fargo ($WFC ) CEO Charles Scharf
- “The consumers of Bank of America have had access to credit and not borrowing irresponsibly. Their balance sheets are generally in good shape and while impacted by higher rates, remember, many of them have fixed rate mortgages and remain employed, so they’ve shown great resilience.” – Bank of America ($BAC ) CEO Brian Moynihan (…) The point we’ve made is that our consumer deposit balances at Bank of America remain 30% higher than pre-pandemic…In the lower average balance size accounts, the balances in there still remain at multiples of pre-pandemic levels, nearly 3 years past the last stimulus. They are modestly declining. The deposit outflows you’ve seen in consumer have largely been driven by the higher balance accounts, who moved their excess balances into the markets to seek higher yields. We capture those with our leading wealth platform” – Bank of America ($BAC ) CEO Brian Moynihan
This chart plots nominal and inflation-adjusted deposits:
Canada Inflation Accelerates to 3.4% in December
The consumer-price index fell 0.3% in December from the previous month and increased 3.4% from a year earlier, the government statistics agency said Tuesday. That compares with November’s 0.1% monthly gain and represents a quickening after annual inflation held steady at 3.1% that month. (…)
Core prices, which strip out volatile food and energy items, also rose 3.4% in December from a year earlier, a slight moderation from the prior month’s 3.5% annual increase, Statistics Canada said.
Still, the Bank of Canada may take less comfort from an acceleration in two measures of annual core inflation it closely monitors. Weighted median and trimmed mean CPI rose an average 3.65% in December from a year earlier compared with 3.55% growth in November. (…)
Stripping out gas, headline inflation slowed to 3.5% for the month from 3.6% in November, still well ahead of the central bank’s goal. (…)
For the year, the CPI rose 3.9% on an annual average basis, sharply cooler than the 40-year high increase of 6.8% in 2022, Statistics Canada said. (…)
U.K. Inflation Unexpectedly Rebounds U.K. consumer prices rose 4% in December, driven by new taxes on tobacco products, and likely pushing out calls for rate cuts at the Bank of England.
Lagarde Says It’s Likely ECB Will Cut Rates in Summer
- Villeroy Says Premature to Know When in 2024 ECB Will Cut Rates
- Eurozone wages ticked up to 3.9% y/y in Dec based on the latest Indeed wage tracker data. The sticky wage gains suggested by that will likely bolster the hawks in January. But remember, the ECB’s own wage forecast is at 4.6% for 2024… We need (controlled) catch-up wage gains (@OliverRakau)
China Growth Rate Slows to One of Lowest in Decades A festering property-market meltdown offsets much of the benefit of a postpandemic recovery in the world’s second-largest economy.
Gross domestic product in China expanded 5.2% in the fourth quarter and for the full year in 2023, according to data released by the National Bureau of Statistics on Wednesday. The reading confirmed a number uttered by Premier Li Qiang a day earlier at the World Economic Forum in Davos, Switzerland—an unusual disclosure of a high-profile data point by a senior leader before its formal release. (…)
This year’s outcome was flattered in part by comparison with the relatively low base of 2022, when harsh pandemic lockdowns swept the nation, crimping growth. (…)
Forecasts for China’s growth rate this year among several global investment banks range from 4% to 4.9%. (…)
Official statisticians said China’s population shrank by 2.08 million people last year, falling to 1.410 billion, after declining in 2022 for the first time in decades. (…)
Full-year economic data released by China on Wednesday showed retail sales, a key gauge of consumer spending, gained 7.4% in December and rose 7.2% for the full year compared with the respective year-earlier periods. Retail sales had fallen 0.2% for the full year in 2022. (…)
Fixed-asset investment growth slowed last year, rising 3.0% for the full year compared with a 5.1% expansion in 2022. Private-sector investment, too, remained weak, falling 0.4% in 2023 compared with a year earlier as policy uncertainty spooked entrepreneurs. Private-sector investment had risen 0.9% in 2022. (…)
Average new home prices in December fell 0.45% from November, and 0.89% when from a year earlier, according to calculations by The Wall Street Journal based on data released by the statistics bureau. The pace of both declines was worse than in November.
For the full year, property investment fell 9.6%, while new construction starts dropped 20.4% and home sales by value declined 6.0%.
The surveyed urban unemployment edged up to 5.1% in December, from 5% in November. Economists have cast doubt on the accuracy of official statistics on joblessness in large part because the survey leaves out the country’s nearly 300 million migrant workers. (…)
On Wednesday, China’s statistics bureau said that it would publish a new urban youth unemployment figure each month for people age 16 to 24 that excludes students. The reading was 14.9% in December. (…)
On a quarter-by-quarter basis, however, GDP grew 1.0%, slowing from a revised 1.5% gain in the previous quarter.
New home prices in December logged their steepest drop since February 2015, while property sales measured by floor area fell 23% in December from a year earlier, data from the National Bureau of Statistics (NBS) showed on Wednesday. (…)
Overall for 2023, property investment dropped 9.6%, roughly the same as the slide in 2022. (…)
Of the 70 cities in the NBS home price data, 62 reported a fall in prices in monthly terms, up from 59 in November.
Home prices in December declined at the fastest pace in nine months, down 0.4% year-on-year after a 0.2% fall in November.
For the home resale market, prices among 70 cities all fell year-on-year for the seventh straight month in tier-one, tier-two and tier-three cities. (…)
Source: Rhodium Group Read full article
…. while household deposits continue to rise.
Source: @WSJ Read full article
SENTIMENT WATCH
- US equity positioning remains quite stretched to the long side, per Goldman. (@Mayhem4Markets)
- I suppose the equity market is betting on that the Empire Fed survey is an aberration… (@MikaelSarwe)
