Economic Update Research Brief

Delayed data reinforces slowdown. After weeks of data gaps due to the federal government shutdown, the latest releases on jobs, retail sales, and the consumer price index confirmed the U.S. economy continues to cool. Payroll gains remained modest in the private sector in October and November, while government employment fell mainly due to earlier layoffs showing up as severance periods expired. Retail sales growth also moderated, signaling more cautious spending ahead of the holiday season. Inflation, however, remained contained, with core CPI at 2.6 percent year-over-year in November, giving the Federal Reserve room to ease if job growth weakens further. Even so, if inflation moves higher again amid softer hiring, household budgets may face renewed pressure. Lower borrowing costs and fiscal support could, nevertheless, help stabilize activity.