Inflation Cools More Than Expected in January
U.S. inflation slowed in January, with the consumer price index rising 2.4% year over year, slightly below expectations and down from the previous month. Core inflation, which excludes food and energy, came in at 2.5%, its lowest level since 2021. Monthly price increases were modest. Shelter costs cooled, energy prices declined, and vehicle prices remained muted, though airline fares jumped sharply. The softer data boosted expectations for a Federal Reserve rate cut in June, even as broader economic signals remain mixed.
January Jobs Report Beats Expectations
Job growth came in stronger than expected in January, with nonfarm payrolls rising by 130,000 compared with forecasts for 55,000, while the unemployment rate dipped to 4.3%. Gains were largely driven by health care and social assistance, though construction also improved and some sectors, including federal government and financial activities, saw losses. Wage growth remained steady, with average hourly earnings up 0.4% for the month and 3.7% year over year. The report eased concerns about labor market weakness and reinforced expectations that the Federal Reserve will hold rates steady in the near term, with a potential cut still eyed for June.
Holiday Retail Sales Stall in December
Consumer spending stalled in December, with retail sales flat for the month and missing expectations amid rough weather, tariff pressures, and persistent inflation. Annual sales growth slowed to 2.4%, lagging the 2.7% inflation rate, while a key “control group” measure tied to GDP slipped 0.1%. Declines in autos, clothing, furniture, and electronics offset modest gains in online sales and building materials, reflecting cautious spending among middle- and lower-income consumers. The weak report clouds an otherwise solid fourth quarter and could temper expectations for overall economic growth heading into the new year.
As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
