Retail Sales (Dec.) & Producer Prices (Jan.)

The unexpected plunge in control group retail sales in December means that fourth-quarter GDP growth was probably nearer 2.5% annualised than the 3.1% we had pencilled in and, more worryingly, it also suggests the economy entered 2019 with less momentum than anticipated. That doesn’t mean the economy is falling into recession; after all, that decline is hard to square with the recent strength of payroll gains and the boost to households’ purchasing power from lower energy prices. But with the producer price data suggesting inflationary pressures remain contained, it strengthens the case for the Fed to remain “patient” in the months ahead.