Hurricanes could affect September economic data
Investors will get fresh data this week on inflation, consumer confidence and retail sales and pore over minutes of last month’s Federal Reserve meeting for clues about the timing of the central bank’s next interest rate hike.
The incoming economic data could be affected by the shortterm impact of Hurricanes Harvey and Irma.
Minutes of the Fed’s Sept. 1920 meeting, set for release Wednesday, are likely to “reflect the amount of debate among participants about recent inflation weakness,” says Lewis Alexander, economist at Nomura.
After last month’s meeting, Fed members expressed uncertainty as to why inflation levels have not picked up and remain weak. A key underpinning of the Fed’s decision-making regarding rate hikes are signs that inflation is moving back up toward its 2% target. But inflation remains soft. Still, Wall Street is pricing in a
92% chance the Fed will hike interest rates for a third time this year at its meeting in December.
Thursday, the producer price index, or PPI, is set for release. Wall Street economists expect a month-over-month increase of
0.4%, up from 0.2% in August. They attribute the estimated rise to higher prices for refined petroleum due to Hurricane Harvey knocking out refining capacity in Texas and higher costs for building materials as homeowners work to repair damaged homes.
The consumer price index, or CPI, which offers a snapshot of what prices consumers are paying at retail stores, the gas pump, car dealerships and other places, will be released Friday. Nomura expects a 0.2% jump in September CPI. Its 12-month estimate is 1.8%, below the Fed’s 2% target. Consumer prices, however, will get support from an expected rise in the cost of new and used cars, due to rising demand from consumers who needed to replace vehicles destroyed by the storms.
Higher prices are expected for lodging at hotels and apartment rentals due to displaced Americans in hurricane-impacted areas turning to temporary shelter.
September retail sales data is also out Friday, and economists are expecting a sharp rebound from the 0.2% drop in August.
Consumer confidence, which dipped a tad in August but is still at its highest level in more than a decade, is seen holding steady. The University of Michigan’s latest consumer sentiment index also releases on Friday.
Consumer confidence, which dipped a tad in August but is still at its highest level in more than a decade, is seen holding steady.