“Yesterday provided us with a lot of economic data, something we can bet that will be under the microscope with the upcoming FOMC meeting starting on January 31st.  With this being the first Fed meeting of 2023 there shouldn’t be a shortage of discussions happening between all the Fed presidents as they digest some big data points that closed out 2022.”

“First up we had Q4 GDP, coming in a bit hotter at 2.9% when projections were set at 2.6%. With GDP we also got Personal Consumption and Core PCE for Q4. Personal Consumption contracted more than anticipated coming in at 2.1% when expectations were set at 2.9%, this is a large gap isn’t so surprising considering Q3 figures were at 2.3%. Lastly PCE came in at 3.9%, in line with expectation and coming down further from its Q3 counterpart which was at 4.7%. With all the figures for Q4 coming inline or lower than expected, we can see that Fed policy is having the desired effect and further implies that to hit target Federal Funds Rate, hikes must continue for awhile throughout 2023. GDP and consumer spending for 2021 and 2022 are highlighted below in figure 1. An interesting trend to see is how GDP contracted in Q1 and Q2 for 2022, while consumer spending was somewhat strong.”

“We also had New Home Sales and Durable Goods Orders for December released yesterday, the figures there show a slightly different story. New Home Sales was up a bit at 616k for December, not only beating projections but also up from November as seen in figure 2. D.R. Horton Inc, one of the largest builders of homes in the US, released its Q4 results yesterday posting strong numbers and voicing some enthusiasm for future demand. Durable Goods Orders for December posted by far the strongest number coming in hot at 5.6% beating estimates by 3.1% (in November we saw a contraction of 2.1%).”

“Today we also have a slew of data coming in to close out the week and something for sure will be looked at, with next week’s FOMC meeting. Top data points for today:

• 8:30AM EST:

  • Person Income for December – projected at 0.2%

  • Personal Spending for December – Projected at -0.1%

• 10:00AM EST:

  • U of M Consumer Sentiment Report – projected 64.6″

Joe Khalil
Divisional Vice President, Sales | Rocket Pro TPO