“Output growth slows in January and price pressures rise,” S&P Global said Friday, summarizing what it was fair to call a disappointing read on the US economy.
Activity in the normally boisterous services sector calmed early this month, according to the flash print on S&P Global’s gauge. At just 52.8, the headline undershot even the lowest estimate from 16 economists. Consensus wanted 56.5.
The readout was a nine-month low and marked a rather dramatic deceleration from November. In fact, the month-to-month drop was the most pronounced since July of 2022.
Of course, any reading above 50’s indicative of expansion but… well, the figure speaks for itself. Here’s hoping the headline’s revised higher in the final reading later this month, which’ll anyway be overshadowed by ISM’s services gauge.
The factory headline, meanwhile, printed in expansion territory, but by the slimmest of slim margins. 50.1’s hardly robust, but it was enough to top the 49.8 consensus.
The inflation picture looked disquieting. S&P Global said average prices charged for services rose at the briskest pace in four months, and prices charged for goods rose even faster (that index printed a 10-month high).
“Rising price pressures are a concern,” S&P’s chief business economist Chris Williamson said Friday, flagging “supplier-driven price hikes” and persistent wage pressures which, “if sustained, could… encourage a more hawkish policy approach from the Fed” assuming growth doesn’t crater, manifesting in job losses.
That brings us neatly to the good news: Generalized optimism about the prospects for the economy manifested in more hiring. Indeed, the overall employment gauge reflected the quickest pace of hiring since 2022, led by what the release described as “a surge in service sector hiring.”
So, in the here and now, there’s evidence of stagflation. But hope floats. “Although output growth slowed slightly in January, sustained confidence suggests this slowdown might be short-lived,” Williamson said.
It better be. Short-lived, I mean. The Duce doesn’t like slowdowns.
All those CEOs and business owners elated by the resurrection of Il Duce may learn a hard lesson in being careful what you wish for…
Seems to me it’d be hard to run a business if your cost of goods goes up or down 25% based on the whims of a “madman” negotiator and a significant chunk of your labor force is under threat of deportation.
Oh, and what about those dreams of yuuuuggggeeee tax cuts? Republicans are learning that it’s hard to squeeze water from the stone that is the poor people in this country, and if the deficit hawks hold the line, the tax cut fairy may not be able to deliver nearly as much as they hoped.