Modest Rise Expected in U.S. Retail Sales; Goolsbee Sees 'Undeniable' Down Trend in Inflation; RBA Mulled Raising Rates at October Meeting By James Christie
Good day. Americans may be feeling the pinch of inflation and high interest rates, but that hasn't kept them from shopping. Today's retail sales report for September will show whether they are still at it. One reason they have been able to to snap up expensive items, including cars, is the robust jobs market. Economists estimate September retail sales rose a modest 0.3% from the prior month, after rising robustly in August, in part because of higher gas prices. Meanwhile, Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday that inflation is without a doubt trending downward. Elsewhere, minutes of the Reserve Bank of Australia's Oct. 3 policy meeting published Tuesday showed that the central bank's board members mulled raising the cash rate by 25 basis points amid worries that persistently high gasoline prices could slow progress in lowering inflation over coming months. The RBA kept the rate at 4.10% for a fourth consecutive month at the October meeting.
Now on to today's news and analysis.
Top News How Long Can the American Consumer Keep Splurging?
Interest rates are high, inflation remains elevated and pandemic savings are dwindling. Yet the American consumer continues to spend steadily-at least for now.
Tuesday's retail-sales report , which includes spending at stores, online and at restaurants, will show whether a strong display of consumer resilience persisted in September, or things slowed down.
"Overall the consumer balance sheet is still quite strong," said Kathy Bostjancic, chief economist at Nationwide Mutual Insurance.
Chicago Fed's Goolsbee Says Declining Inflation Not a 'Blip'
The recent slowdown in U.S. inflation is a trend and not a "one-month blip," Federal Reserve Bank of Chicago President Austan Goolsbee said Monday. In an interview with the Financial Times, Goolsbee denied progress had stalled on getting inflation back to the Fed's 2% target. In the interview, Goolsbee said, "It's undeniable this is a trend. It wasn't a one-month blip." The headline September consumer-price index came in at 0.4%, a tick above expectations, and the annual rate held steady at 3.7%. (MarketWatch)
WSJ Podcasts: Key Fed Official on What's Next for Interest Rate Hikes
This week, we're looking at what the Federal Reserve is watching as it plots the course of interest rate increases, and San Francisco Fed President Mary Daly joins us with her take on where the economy stands.
U.S. Economy AI Could Spur an Economic Boom. Humans Are in the Way.
The increasing popularity of generative artificial-intelligence tools that create new content by consumers and companies has some economists predicting it will revolutionize workplaces and spur economic growth by lifting productivity .
It's Getting Too Expensive to Have Fun
Ticket prices for live entertainment events, from Taylor Swift concerts to NFL games and high-season Disney theme-park visits, rose at a startling rate this year, triggering a phenomenon that analysts have dubbed "funflation."
M.B.A. Job Offers in Short Supply
Career officers and students at Yale University, Columbia University and Northwestern University say firms are spending less time on campus than in recent years to hire second-year M.B.A. candidates, or holding off on job offers.
The $1.5 Trillion Private-Credit Market Faces Challenges
Many borrowers paying floating rates that fluctuate with benchmark interest rates are having a difficult time keeping up with rising debt payments, resulting in defaulting loans and, in some cases, bankruptcies.
Home Insurance Is So High in This Town, Residents Are Leaving
Florida's explosion in insurance premiums threatens to ground its highflying housing market. In West Palm Beach's Flamingo Park neighborhood, some homeowners are dropping insurance, and others who can't are selling.
Key Developments Around the World RBA Warns of Low Tolerance for Stubborn Inflation
The Reserve Bank of Australia continues to warn that further interest-rate increases may be needed. "The board has a low tolerance for a slower return of inflation to target than currently expected," the RBA said.
China Reboots Its Belt and Road Initiative
A decade after its launch, China is trying to revive its Belt and Road Initiative as Chinese leader Xi Jinping prepares to host an anniversary bash for the sprawling infrastructure program in Beijing this week.
China Property Bonds Looked Cheap. They Weren't. Read My Lips: No Taxes at All
As election pledges go, "No New Taxes" has been done to death. In topsy-turvy Argentina, the ruling party's presidential candidate, current Economy Minister Sergio Massa, has upped the ante, calling simply for "No Taxes."
Financial Regulation Roundup FTX's Political Donations Came From Funds, Insider Testifies
Crypto exchange FTX made political donations in employee names using stolen customer funds , former executive Nishad Singh said on Monday during the trial of FTX founder Sam Bankman-Fried.
Risk-Advisory Firms Decide Hong Kong Isn't Worth It
A number of investigation firms are retreating from Hong Kong, the latest sign of concern among foreign companies as business dwindles and Chinese authorities crack down on corporate intelligence-gathering.
Forward Guidance Tuesday (all times ET)
Time N/A: ECB's de Guindos at Ecofin meeting in Luxembourg
8 a.m.: New York Fed's Williams in moderated discussion with Intel CEO Pat Gelsinger at Economic Club of New York
8:15 a.m.: Canada housing starts for September
8:30 a.m.: Canada consumer-price index for September; U.S. retail sales for September
9:15 a.m.: U.S. industrial production for September
9:20 a.m.: Fed's Bowman speaks at Harvard Law School Program on International Financial Systems Roundtable on Central Bank Digital Currency
10:45 a.m.: Richmond Fed's Barkin speaks to the Real Estate Roundtable in Washington
2 p.m.: ECB's de Guindos speaks at 5th ECB Macroprudential Policy and Research Conference in Frankfurt
5 p.m.: Minneapolis Fed's Kashkari speaks at 15th Annual Rothenberger Lecture, University of Minnesota Medical School
Wednesday
2 a.m.: U.K. consumer- and producer-price indexes for September
5 a.m.: EU harmonized consumer-price index for September
8:30 a.m.: U.S. housing starts and building permits for September
12 p.m.: Fed's Waller speaks at Distinguished Speaker Seminar of European Economics and Financial Centre
12:30 p.m.: New York Fed's Williams in moderated discussion at Queens College
1 p.m.: Fed's Bowman speaks at Fed Listens event of Federal Reserve Bank of Richmond
2 p.m.: Federal Reserve Beige Book
3 p.m.: Philadelphia Fed's Harker speaks at People, Possibilities, Practice: Designing a Better Future for Workers
6:55 p.m.: Fed's Cook speaks at Louis E. Martin Awards Ceremony at 2023 Future of Black Communities Summit
Research Economists Split on When Firms Will Stop Hoarding Labor
Some companies are keeping labor force levels steady despite weak expectations for demand, a move known as "labor hoarding." Economists are divided on when such behavior is likely to end, according to the latest quarterly survey by The Wall Street Journal. Some 36% of business and academic economists say labor hoarding will end in the first quarter of next year, while 12% expect it will end in the second quarter and 10% in the third quarter of 2024. Some economists expect labor hoarding will continue for longer: 22% say it will only end in the first quarter of 2025 or later, while 10% responded "never."
-Harriet Torry
RBA's Hawkish Language Increases Risk of November Rate Rise
The surprisingly hawkish language used by the Reserve Bank of Australia in the minutes of its last board meeting increases the risk of a November interest-rate rise, Citi economists say. They maintain their forecast for a 25bp hike in December to a peak of 4.35%, but warn that the RBA's focus on data could lead to an earlier move. They write in a note that next week's September quarter CPI data could prompt the RBA to raise the cash rate in November.
-Stuart Condie
Bank of England Can Breathe Easier After No Wage Shocks
There is little in the latest U.K. wage-growth data that would push the Bank of England into lifting interest rates again, James Smith, developed markets economist at ING, says. Wages rose 7.8% in the three months to August, slowing from the previous period, new figures show Tuesday. While salaries are still rising faster than the BOE would like-since they add to inflationary pressure-the figures throw up no unpleasant surprises and alleviate pressure to lift interest rates next month, Smith says in a note. Inflation data, due Wednesday, could nevertheless lead the bank into resuming its cycle of rate increases if it shows strong price pressures, he says.
-Joshua Kirby
Commentary What Defense Stocks Say About a More Violent World
The bloody attack on Israel and inevitable retaliation have turned defense stocks into gauges of geopolitical risk , albeit imperfect ones, but for now they are flashing amber rather than red, Jon Sindreu writes.
EVs Are on a Lithium Roller Coaster
To fulfill its promise, the lithium industry needs to be profitable enough to invest-but not so much as to throw EVs off course. It isn't turning out to be an easy balance to strike, Stephen Wilmot writes.
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10-17-23 0715ET
