January 15 is a federal holiday for the observance of M.L. King, Jr. day in the US. Stock and bond markets will be fully closed, but many businesses will be open. Disruptions to the data calendar are few, although it does mean that government releases will be packed into a four-day period.
With the next FOMC meeting on the near horizon on January 30-31, there are two reports that stand out, especially given the picture of the labor market that ongoing rebalancing and slowing in inflation are behaving much as Fed policymakers have anticipated.
December retail and food-service sales at 8:30 ET on Wednesday could finish the fourth quarter with a decent gain. Sales of motor vehicles and parts should reflect the already released increase in unit sales. If falling prices for gasoline reduce the dollar value of service station sales, volumes sold are likely to have risen during the peak travel period around the winter holidays. Industry reports in the retail sector point to solid spending in December, although consumers were likely cautious and focused on bargain hunting including comparison shopping among e-commerce sites. Still, the fourth quarter should maintain the momentum for personal consumption expenditures when the advance estimate for GDP is released at 8:30 ET on Thursday, January 25.
While not hard numbers, the Fed’s Beige Book at 14:00 ET on Wednesday will provide the FOMC a look at the anecdotal evidence about economic conditions since mid-November. Fed forecasts are looking for a slowdown in the current expansion, but not a recession. However, the Beige Book has maintained a weak tone for nearly a year. It would have been consistent with recessionary conditions except for the strength of the labor market. As long as unemployment remains low – 3.7 percent in the December employment report – one of the main flags of a recession is absent. However, the FOMC is going to be alert to any hint of rapid increases in layoffs that could change the picture.
