Summary
United States: First Looks Point to February Activity Holding Firm
- Data this week did little to alter the picture that, to the extent the underlying trend in the economy is softening, it is not weakening nearly enough to put a quick end to inflation. Manufacturing activity is contracting only gradually, while the service sector continues to expand at a solid clip according to the February ISM releases.
- Next week: Consumer Credit (Tue), JOLTS (Wed), Employment (Fri)
International: Major Economies See Slower Growth, Slowing but Still High Inflation
- With China being a notable exception, this week’s news largely consisted of slower growth late in 2022 for many of the major developed economies. Looking at Q4 GDP, Australia’s economy grew by less than expected, GDP was flat for the quarter in both Canada and Switzerland, and Sweden’s economy contracted in the final quarter of last year. Eurozone headline inflation eased only slightly, while core inflation firmed to the fastest pace on record.
- Next week: Reserve Bank of Australia (Tue), Bank of Canada (Wed), Mexico CPI (Thu)
Interest Rate Watch: Growing Interest in Credit Card Debt
- The cost of financing credit card debt has surged with the average interest rate reaching the highest in data going back to the mid-1990s. The share of credit card balances transitioning into early delinquency is rising, and all else equal, rising debt and rising financing costs for that debt could be a negative factor for consumer spending later this year.
Credit Market Insights: Student Loan Forgiveness Arrives at the Supreme Court
- On Tuesday, the Supreme Court heard opening arguments for two cases involving the Biden administration’s proposed student loan relief program. Last summer, we wrote a report on the potential economic impact of student debt cancellation, but how has the situation evolved in the six months since?
Topic of the Week: Global Recession Risks Are Receding
- We have upgraded our China forecast following strong sentiment data in February. We now expect Chinese GDP to expand 5.5% in 2023, up from our previous forecast of 5.2%. China’s economy has experienced a rebound following the end of Zero-COVID policies, increasing the likelihood that the global economy can skirt a recession this year.
