This Week in Economic Data: Key Insights and Implications

Summary:

This week’s economic data releases came with significant caveats, impacting job numbers, unemployment rates, retail sales, and inflation metrics. The economy lost 105,000 jobs in October but gained 64,000 in November, with factors like the government shutdown and deferred resignations skewing the numbers. Unemployment rose to 4.6%, retail sales were flat, and CPI inflation slowed to 2.7% YoY, though methodological adjustments and timing issues clouded these figures. Meanwhile, the Nasdaq-100 rose 1%, and 10-year Treasury yields dipped slightly.

What This Means for You:

• Job Market Volatility: Be cautious about interpreting employment data, as temporary factors like government shutdowns can distort trends. Focus on long-term labor market indicators for career planning.
• Inflation Watch: While CPI suggests slowing inflation, methodological quirks mean prices may not be falling as much as reported. Adjust your financial planning accordingly.
• Retail Spending: Flat retail sales signal cautious consumer behavior. For businesses, consider strategies to boost demand during slower periods.
• Market Impact: With mixed economic signals, investors should stay diversified and monitor upcoming data releases for clearer trends.

Original Post:

This Week

We got some major data releases this week, but they all came with a big ol’ asterisk. (And AI spending remained a focus.)

1. The economy lost 105,000 jobs* in October and gained 64,000 in November.

   *DOGE’s deferred resignations, which paid workers through September, drove a 162,000 decline in federal employment.

2. The unemployment rate rose more than expected to 4.6%** in November from 4.4% in September.

   **Likely boosted by the government shutdown since 75% of the increase in unemployment was from “temporary layoffs” – the category for furloughed federal workers.

3. Retail sales were flat*** in October.

   ***Spending on autos fell 1.6% m/m after the September expiration of the EV tax credit had pulled forward demand, while lower gas prices contributed to a 0.8% decline in spending at gas stations.

4. Headline CPI inflation slowed to 2.7% YoY**** in November from 3.0% in September.

   ****Two problems: First, the BLS assumed housing costs were flat in October, depressing one of the biggest weights in the CPI. Second, data collection began Nov. 14 due to the government shutdown, so holiday discounts likely depressed prices.

So, for the week, the Nasdaq-100 is up +1% (blue line), and 10-year Treasury yields are down a few bp to 4.15% (black line).

Next Week

Here are the top events I’m watching next week:

1. Third-quarter real GDP on Tuesday
2. November industrial production on Tuesday
3. December consumer confidence on Monday
4. October durable goods on Tuesday

Extra Information:

For deeper insights, check out these resources:

• BLS Employment Situation Report – Official details on job numbers and unemployment rates.
• Federal Reserve Industrial Production Report – Insights into industrial output trends.

People Also Ask About:

• Why did unemployment rise despite job gains? The increase was largely due to temporary layoffs during the government shutdown.
• Is inflation really slowing down? CPI data suggests a slowdown, but methodological adjustments may obscure the true picture.
• What’s driving retail sales stagnation? Expiration of EV tax credits and lower gas prices contributed to flat retail sales.
• How does government shutdowns affect economic data? Shutdowns can distort employment, inflation, and other metrics due to delayed or adjusted data collection.

Expert Opinion:

This week’s data underscores the importance of looking beyond headline numbers. Temporary factors like government shutdowns and methodological assumptions can significantly distort economic trends. Investors and policymakers should focus on underlying patterns and upcoming data for a clearer view of the economic landscape.

Key Terms:

• Economic data releases
• Unemployment rate trends
• CPI inflation methodology
• Government shutdown impact
• Retail sales stagnation

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