MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: Three economic reports this past week. They are all positive, and they reflect continued growth. But at the same time, they do suggest a bit of an economic slowdown.
First, retail sales picked up in October, and that followed two down months. The Commerce Department said consumers spent 8/10 tenths of a percent more in October over September. That’s a healthy increase. But it’s nothing like the torrid spending that went on in the spring and summer months.
Economic report number two: industrial production. That ticked up one 10th of a percent, and it marks five months in a row for growth. On a year-to-year basis, manufacturing, mining, and utilities are producing 4.1 percent more. But it does represent a slowdown.
It prompted one of the key economic forecasting firms to trim its expectation for fourth-quarter GDP from 2.6 percent growth to 2.5.
That’s still good news. Here’s what that means: we remain on pace for full-year GDP growth to top 3 percent. That has not happened in 14 years.
Economic report number three: consumer prices. They rose a modest 3/10s of a percent in October. Year-over-year they are up 2-1/2 percent. But if you back out food and fuel — those prices fluctuate pretty wildly — the so-called core inflation rate is at 2.1 percent year-over-year. And that’s just a notch above the 2 percent that indicates price stability. That’s what you want.
REICHARD: And, crucially, it’s what the Federal Reserve wants. The central bank has the power to raise interest rates if it thinks we are at risk of inflation. The chairman of the Federal Reserve spoke last week for about an hour at the Fed bank in Dallas.
Fed chair Jerome Powell said he believes the economy can continue to grow and even grow faster.
POWELL: I’m very happy about the state of the economy now. And I think part of that is we have moved, our policy is part of the reason the economy is in such a good place right now. You know, we have 3.7 percent unemployment, the economy’s growing at 3 percent, inflation’s right on target, and there’s pretty good reason to think that we’re going to continue in a positive vein like that.
REICHARD: The Fed has raised the interest rate it controls eight times since 2015, each time by a quarter percentage point. It stands now at 2 percent. Powell wants it at 3 eventually, which he says is a normal rate in such a healthy economy.
But he said in Dallas last week he’s mindful of the signs of slowdown and the effect of higher rates of interest on that slowdown.
EICHER: Powell also pointed to storm clouds in global markets. In the 19 European nations that use the common currency the Euro, economic growth is at a virtual standstill. Third-quarter economic growth was an anemic 0.2 percent. The biggest driver is Germany, which suffered a third-quarter GDP of minus 0.2 percent. If that happens in the fourth quarter, that is by definition a recession.
And that’s today’s Monday Moneybeat.