The Weekly Round-Up: Developments on the Economy (January 13, 2023)

In recent weeks CEOs and financial markets received mixed news about the US economy.

December CPI readings showed continued relief in inflation and are consistent with our forecast that topline year-over-year CPI peaked in Q2 2022. Still, the readings remain far too high. The improvement in the headline figure was largely driven by lower energy prices, although prices for many core goods also declined. However, core inflation ticked up slightly due to rising prices in core services, like shelter. As the housing market cools further over the coming months, shelter prices should gradually follow suit. 

The December 2022 jobs report showed the US labor market is still strong, with 223,000 jobs added for the month, after an increase of 256,000 jobs (a downward revision) in November. Labor shortages persist due to structural factors—including, but not limited to, early retirements and reduced immigration. Demand for workers remains robust in in