What's Coming Up Next Week?

On Monday afternoon, the Federal Reserve will release the results of its quarterly survey of senior loan officers. Last quarter, it showed banks were raising the bar for who they'll lend money to and on what terms.

A slew of Federal Reserve officials will speak at various engagements next week, and many will be looking for clues as to what the Open Markets Committee needs to get "greater confidence." CPI revisions on Friday will also likely impact the Fed's take on if inflation is sustainably moving toward its 2% goal.

How Does The Economy Keep Beating Economists' Expectations?

Whether it’s the number of jobs added, the amount of money people are spending at stores, or the economic output of the country, report after report has delivered pleasant surprises. It’s also perplexed economists who keep expecting it to slow down at some point.

“We don't precisely know the answer, but there are a couple of theories,” Ali Jaffery, an economist at CIBC, said in an interview.

There is good reason to expect a slowdown. After all, the Federal Reserve has thrown sand in the economic gears by holding its benchmark interest rate at a 22-year high to combat inflation, pushing up borrowing costs for mortgages, car loans, credit cards, and all kinds of other credit. 

Experts blame several things for the disparity in their estimates and the economic data—including the mortgage lock-in effect, the effects of the Federal Reserve's fight against inflation and strong consumer demand.

Read more about how the economy continues to defy expectations here.

Chinese Economic Slump Could Impact US Companies

China's economy is set to see growth slow to 4.6% in 2024, dragged down by the country's subdued exports and a weak real estate sector, the International Monetary Fund said Friday.

U.S. firms like Apple (AAPL) are taking a hit as China's economy slumps. That, along with heightened competition from firms in the country resulted in decreased sales in China and pushed the iPhone maker's shares down Friday.

Read more about China's weakening economy here.

-Fatima Attarwala

Consumers Felt Much Better About The Economy In January, Consumer Sentiment Survey Shows

People are starting to feel much better about their finances and the economy—and with sinking inflation, a favorable job market, and rapid pay increases, it’s little wonder.

The Index of Consumer Sentiment, a widely watched measure of consumers’ economic outlook, surged 13% in January, researchers at the University of Michigan said. This update confirms a preliminary report from earlier in the month showing similar results.

“After reserving judgment last fall about whether the slowdown in inflation would persist, consumers now feel assured that inflation will continue to soften,” Surveys of Consumers Director Joanne Hsu said in a prepared statement.

While the index has been improving, it’s recovering from a plunge that started in late 2021 amid alarmingly high inflation and remains 7% below its historical average.

Economists pay close attention to measures of consumer sentiment because in general, the better people feel about money matters, the more they spend—and consumer spending is the backbone of the U.S. economy, making up 70% of the Gross Domestic Product.

No Surprises in Friday's Factory Orders Growth

The report, which measures the dollar value of goods from factories, increased $1.2 billion to $594.3 billion, according to the Census Bureau Friday.

Factory orders grow retailers and suppliers need more supplies because consumers demand more goods and services. An increase in factory orders often means the economy is expanding, but economists are keeping an eye on the details of the report for clues as to whether this expansion is fueling inflation.

Friday's Job Report Likely Won't Please the Fed

With wages surging in a hot labor market, and no mass layoffs in sight, the report may spur the Federal Reserve to keep the rate high for longer than investors anticipated a few days ago.

Read more about how Friday's job report could impact the Federal Reserve's rate hike timing here.

November and December Added More Jobs Than Originally Thought

Employers Add Almost Double the Number of Jobs Expected

U.S. employers added 353,000 jobs in January, the highest in a year, the Bureau of Labor Statistics said Friday. That was well over the 185,000 consensus forecast according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.

Update: This entry has been corrected to reflect the January jobs number.