(The Center Square ) – This week’s economic data deluge will provide critical insights into whether the economy was re-accelerating as we closed out 2024 and entered 2025.
Here’s what’s on the radar:
CPI & PPI: Did inflation gain momentum?
The Consumer Price Index (CPI) and Producer Price Index (PPI) for December will reveal whether inflation pressures ticked higher during the holiday season. With strong productivity growth and easing wage gains, consumer price inflation is expected to remain subdued, but any upside surprises could cause another uptick in the interest rates that govern consumer borrowing costs.
Retail sales: A holiday spending snapshot
December’s retail sales report is due at the end of the week. Preliminary data from Mastercard SpendingPulse™ offers key takeaways:
Retail sales excluding automotive: Up 3.8% year-over-year from Nov. 1 through Dec. 24, surpassing last year’s 3.1% growth.
A cautiously optimistic consumer turned to value this season, with major promotional periods like Black Friday and last-minute December spending driving sales. In November, lower car prices and tariff fears pulled demand forward.
Housing permits & starts: High rates, fewer new builds
December housing data will likely reflect the continued drag from higher interest rates. Rising rental vacancies and a backlog of under-construction buildings are expected to weigh on multifamily starts, while builder confidence remains under pressure in a high-rate environment. Despite total starts continuing their decline, single-family starts had rebounded by 6.4% in November.
What it all means
This week’s reports provide a snapshot of how the economy ended 2024. While market swings are likely, the data is unlikely to alter the Federal Reserve’s approach. The Fed appears committed to holding rates steady, pausing to assess growth and inflation trends. Markets currently expect no rate changes until at least June.
The next employment and inflation reports will complicate the outlook. Seasonal factors, an unusual winter freeze, and lingering effects of wildfires may muddy the picture further for policymakers as they evaluate the economy’s true momentum.
