A surprisingly strong December jobs report published Friday, highlighted by an uptick in wage growth, keeps the spotlight on inflation early in the new year.
The December consumer price index on Thursday will help Wall Street
DJIA
to assess whether inflation remains on a downward trend or gets stuck near 3%. The CPI is the highlight of next week’s economic calendar.
Before the December jobs report, investors were expecting the Federal Reserve to cut interest rates as early as March. For now they are sticking to their guns, according the CME’s FedWatch tool.
Consumer price index
Thursday, 8:30 a.m. Eastern
The CPI is forecast to rise 0.2% in December. Ditto for the closely followed core rate that excludes food and energy.
Such an increase in consumer prices would not be large, but it would halt some of the recent progress on inflation. The annual increase in prices could tick up to 3.3% from 3.1%.
The core rate could slow a bit to 3.8% from 4% — and that would probably garner more Wall Street attention. The core rate is a better predictor of future inflation trends.
In short, a status quo report.
Federal budget deficit
Thursday, 2 p.m. Eastern
The nation’s total debt topped $34 trillion for the first time last week. And the debt isn’t getting any smaller.
The monthly budget deficit for December is expected to total about $62.5 billion.
The total deficit for fiscal 2024 could creep up from last year’s $1.7 trillion gap.
Widening deficits have been a flashpoint in negotiations between the Biden White House and Republican negotiators. The threat of a government shutdown continues to loom as the two sides struggle to cut a deal on spending for the rest of the fiscal year.
Producer price index
Friday, 2 p.m. Eastern
Inflation begins at the wholesale level before it hits consumers. The PPI slowed even faster in 2023 and was negative in three different months. That’s a sign of less inflation in the guts of the economy.
The PPI is also forecast to increase 0.2% in December for both the headline and core rate of wholesale inflation.
For the year, core wholesale inflation is likely to show a slightly more than 2% increase, compared to a 4.7% advance in 2022.
