Evelyn Reynolds

American Express CEO Stephen Squeri on Friday said the credit card company saw “good consumer spending” during the holidays and signs of strong overall health for U.S. spending.
In particular, delinquency rates were “lower than they were in 2019,” Squeri told CNBC’s Scott Wapner.
The signs of resilient consumer spending run somewhat counter to persistent inflation.

Stephen Squeri, chair and CEO of American Express, speaks during an Economic Club of New York event in New York on Nov. 10, 2022.
Stephanie Keith | Bloomberg | Getty Images

American Express CEO Stephen Squeri on Friday said the credit card company saw “good consumer spending” during the holidays and signs of strong overall health for U.S. spending.
In particular, delinquency rates were “lower than they were in 2019,” Squeri told CNBC’s Scott Wapner in an interview at the American Express PGA Tour event in La Quinta, California.

“Our customers are high-spending premium customers, and they are continuing to spend,” he said.
The signs of resilient consumer spending run somewhat counter to persistent inflation. December’s consumer price index increased 0.3%, hotter than the 0.2% expected by economists.
But Squeri said he’s not surprised, adding he’s of the opinion that the U.S. is in the middle of a “soft landing,” slowing spending and bringing inflation down — without spurring a recession.
JPMorgan Chase CEO Jamie Dimon said earlier this week that he remains cautious on the U.S. economy, along with Goldman Sachs CEO David Solomon, who said it’s hard to imagine the number of Federal Reserve rate cuts that the market seems to be calling for in 2024.
“I mean look, recessions do happen,” Squeri said Friday. “The nice part about recessions is there’s always a recovery. … We’ll get through whatever we need to get through, and part of that is because of our customer base, and our colleagues that are supporting our customers.”

American Express reports its fourth-quarter earnings Jan 26.

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The University of Michigan’s Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021.
On a two-month basis, sentiment showed its largest increase since 1991, said Joanne Hsu, the survey’s director.
Consumer sentiment has improved amid a drop in gasoline prices and solid stock market gains.

An employer representative at a Veteran Employment and Resource Fair in Long Beach, California, on Jan. 9, 2024.
Eric Thayer | Bloomberg | Getty Images

Consumers have grown more confident about the direction of the economy and inflation at the onset of 2024, despite persistent worries about a looming slowdown, a survey released on Friday showed.
The University of Michigan’s Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago. That followed a big jump in December and comes despite public opinion surveys showing concern about the nation’s direction.

On a two-month basis, sentiment showed its largest increase since 1991, said Joanne Hsu, the survey’s director.
“Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations,” Hsu said. “Democrats and Republicans alike showed their most favorable readings since summer of 2021. Sentiment has now risen nearly 60% above the all-time low measured in June of 2022 and is likely to provide some positive momentum for the economy.”
Along with the improved outlook on general conditions, survey respondents displayed more confidence that inflation is coming down.
The outlook for the inflation rate a year from now declined to 2.9%, down from 3.1% in December for the lowest reading since December 2020. The Federal Reserve has boosted short-term interest rates to their highest level in more than 22 years and inflation has followed suit lower, though it remains above the central bank’s 2% target.
At the same time, the survey’s index of current conditions also leaped higher, rising to 83.3, or 21.6% higher than a year ago.

Consumer sentiment has improved amid a drop in gasoline prices and solid stock market gains. The price at the pump for a gallon of regular gas is about 30 cents lower than it was a year ago, according to AAA, and the S&P 500 is near a record high.
The survey is “another sign that the economy is on track for a soft landing,” said Andrew Hunter, deputy chief economist at Capital Economics. However, he noted that such surveys don’t always feed through to consumer behavior.
Stocks rose slightly following the release while Treasury yields also were higher.
Markets have been tethered to expectations for where the Fed will take interest rates this year. The prevailing outlook is for a series of up to six quarter-percentage-point cuts this year. But the timing of those cuts is unclear, with market pricing now pointing to a toss-up as to whether the Fed eases in March or waits until May.Don’t miss these stories from CNBC PRO: More

U.K. retail sales volumes fell by 3.2% in December, after a poll by Reuters suggested an expected drop of just 0.5%.
The reading “increases the chances the economy may have ended 2023 in the mildest of mild recessions,” said Alex Kerr, assistant economist at Capital Economics.

Shoppers walk past shops on Regent Street on the final weekday before Christmas in London on December 22, 2023.
Henry Nicholls | Afp | Getty Images

U.K. retail sales dropped significantly more than expected in December, in a sign that the economy may have entered a shallow recession in the second half of 2023.
The Office for National Statistics said sales volumes fell by 3.2% during the key trading month, after a 1.4% rise in November. Economists polled by Reuters had expected a fall of just 0.5%.

December marked the largest monthly decline since January 2021, when strict pandemic lockdown measures dampened demand. The ONS said people appeared to have done their Christmas shopping earlier than in previous years.
Volumes were 0.9% lower in the three months to December 2023, compared with the previous quarter.
It comes after U.K. gross domestic product for the third quarter was revised down to a 0.1% contraction, from a prior reading of no growth.
“Today’s release would subtract around 0.15 percentage points from real GDP growth in December, which increases the chances the economy may have ended 2023 in the mildest of mild recessions,” said Alex Kerr, assistant economist at Capital Economics.
Looking to the year ahead, Kerr said that the impact of higher interest rates on mortgage holders may lead to a further “modest decline” in real consumer spending in the first quarter. He added that the expected interest rate cuts from June and a fall in inflation would support a recovery in the second half of the year.

Trade body British Retail Consortium said that the figures “capped a difficult year for retailers” and showed that Black Friday sales ate into Christmas spending.

The December decline was sharpest in the retail of non-food items, which was down 3.9% after recording 2.7% growth in November. Food store sales were lower by 3.1%, following a 1.1% increase in the previous month.
Online sales showed slightly more resilience, dropping by 1.7% in December — bringing the share of online vs bricks and mortar sales rose from 26.6% to 27.1%.
A combination of poor December weather and Black Friday events likely contributed to the “torrid end” of the retail year, said James Smith, developed markets economist at ING, in a note.
He added, “In reality, the consumer backdrop is starting to improve and that’s hard to square with the scale of December’s decline. We suspect much of the loss will be recovered in January/February.”
A solid outlook for real wage growth, inflation declines and slightly higher consumer confidence will all support the recovery, he said. More

Raphael Bostic at Jackson Hole, Wyoming
David A. Grogan | CNBC

Atlanta Federal Reserve President Raphael Bostic expects policymakers to start cutting rates in the third quarter of this year, saying Thursday that inflation is well on its way back to the central bank’s goal.
Bostic, a voting member this year on the rate-setting Federal Open Market Committee, asserted that the goal ahead is to calibrate policy to be not so restrictive as to choke off growth while still acting as a bulwark against persistently elevated prices.

However, he said a “golden path” scenario of tamping down inflation while promoting solid growth and healthy employment is getting closer than many Fed officials had expected.
“Because I’m data dependent, I have incorporated the unexpected progress on inflation and economic activity into my outlook, and thus moved up my projected time to begin normalizing the federal funds rate to the third quarter of this year from the fourth quarter,” Bostic said in prepared remarks for a speech to business leaders in Atlanta.
While the remarks help illuminate a timeline for rate cuts, they also serve as a reminder that Fed officials and market participants have different expectations about policy easing.
Current pricing in the fed funds futures market points to the first cut coming as soon as March, according to the CME Group’s FedWatch measure. The implied probability for a quarter percentage point reduction has decreased in recent days but still stood around 57% on Thursday morning. Pricing further indicates a total of six cuts this year, or one at every FOMC meeting but one from March forward.
Bostic said he’s not dead set against cutting earlier than the third quarter, implying a move in July at the earliest, but said the bar will be high.

“If we continue to see a further accumulation of downside surprises in the data, it’s possible for me to get comfortable enough to advocate normalization sooner than the third quarter,” he said. “But the evidence would need to be convincing.”
A number of factors could change the calculus, such as geopolitical conflicts, the ongoing budget battle in Washington and looming presidential election, to name a few that Bostic cited.
Consequently, he advocated caution and said his approach will be “grateful and vigilant.”
“In such an unpredictable environment, it would be unwise to lock in an emphatic approach to monetary policy,” Bostic said. “That is why I believe we should allow events to continue to unfold before beginning the process of normalizing policy.”
Some of the data points Bostic said he will be watching include overall economic growth, inflation readings such as the Commerce Department’s personal consumption expenditures price index, and data on job growth and losses.
The Labor Department reported Thursday that initial jobless claims hit their lowest level since September 2022, a sign that the labor market remains tight.
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Initial filings for unemployment insurance totaled 187,000 for the week ended Jan. 13, the lowest level since Sept. 24, 2022.
The total for continuing claims hit 1.806 million, below the FactSet estimate for 1.83 million.

The labor market continued to show surprising resiliency in the early days of 2024, with initial jobless claims posting an unexpected drop last week.
Initial filings for unemployment insurance totaled 187,000 for the week ended Jan. 13, the lowest level since Sept. 24, 2022, the Labor Department reported Thursday. The total marked a 16,000 decline from the previous week and came in below the Dow Jones estimate of 208,000.

Labor strength has persisted despite attempts by the Federal Reserve to slow the economy, and the jobs market in particular, through a series of interest rate hikes. Central bank policymakers have linked the supply-demand mismatch between companies and the available labor pool as an ingredient that had sent inflation to its highest level in more than 40 years.
Along with the drop in weekly claims came an unexpected decline of 26,000 in continuing claims, which run a week behind. The total for continuing claims hit 1.806 million, below the FactSet estimate for 1.83 million.
“Employers may be adding fewer workers monthly, but they are holding onto the ones they have and paying higher wages given the competitive labor market,” said Robert Frick, corporate economist at Navy Federal Credit Union.
In other economic news Thursday, the Philadelphia Fed reported that its manufacturing index registered a reading of -10.6 for January, representing the difference between companies reporting growth against contraction. While the number marked an increase from the -12.8 posted in December, it was still below the Dow Jones estimate of -7.
The Philadelphia Fed gauge showed a decline in unfilled orders, delivery times and inventories. The employment index improved somewhat but was still negative at -1.8 while the prices paid and received measures both eased from December.

A third report Thursday showed some optimism for housing: Building permits totaled 1.495 million, a monthly increase of 1.9% and a bit above the 1.48 million estimate, according to the Commerce Department. However, housing starts totaled 1.46 million, a 4.3% monthly decline but better than the 1.43 million estimate.
The reports come a day after the Fed, in its periodic summary of economic conditions, reported mostly stagnant activity since late November.
According to the central bank’s Beige Book report, the economy broadly showed “little or no change in economic activity” during the period.
On employment, the report did note signs of a “cooling labor market,” with lower wage pressures. On housing, it said high interest rates were limiting activity, though the prospects of future easing from the Fed were raising hopes that the pace could accelerate.
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Retail sales increased 0.6% in December, buoyed by a pickup in clothing and accessory stores as well as online nonstore businesses. Economists expected a rise of 0.4%.
Sales ex-autos climbed 0.4%, better than the 0.2% estimate, and the “control group” increased 0.8%.
On a year-over-year basis, retail sales ended 2023 up 5.6%. The numbers are not adjusted for inflation, so sales show that consumers are more than keeping up with inflation.

Holiday shopping turned out even better than expected in December as shoppers picked up the pace to close out a strong 2023, the Commerce Department reported Wednesday.
Retail sales increased 0.6% for the month, buoyed by a pickup in clothing and accessory stores as well as online nonstore businesses. The results were better than the 0.4% Dow Jones estimate.

Excluding autos, sales rose 0.4%, which also topped the 0.2% estimate.
The report comes amid speculation about how much strength the U.S. economy possessed heading into the new year, when growth is expected to slow. However, a resilient consumer could signal more momentum and possibly give the Federal Reserve some caution about how to proceed on interest rates.
Stock market futures held negative following the release.
“The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.
On a year-over-year basis, retail sales ended 2023 up 5.6%. The numbers are not adjusted for inflation, so sales show that consumers are more than keeping up with an annual inflation rate of 3.4% as measured by the consumer price index. The CPI increased 0.3% in December, also lower than the retail sales increase.

Another measure of retail sales strength that excludes sales from auto dealers, building materials stores, gas stations, office suppliers, mobile homes and tobacco stores rose 0.8% for the month. The Commerce Department uses this so-called control group when computing gross domestic product.
Bank of America economists cautioned that the strong December numbers were “driven by a large shift in seasonal factors” that could be offset when the January data is released.
The report showed broad-based strength in sales for the month, though there were a few areas of weakness. Both clothing and accessory stores and online retailers saw 1.5% increases on the month.
“Consumers shunned brick and mortar stores in favor of online shopping,” said Jeffrey Roach, chief economist at LPL Financial. “The behavioral change that happened during the pandemic will likely persist and successful retailers will adjust to this new model.”
Health and personal-care store receipts declined 1.4% and gas stations saw a 1.3% drop as fuel prices eased. Furniture and home furnishing stores sales also fell 1%.
On a yearly basis, food services and drinking places saw the biggest gains, rising 11.1% though sales were flat in December. Both health and personal care and electronics and appliances saw 10.7% increases. Gas stations dropped 6.6%.
In other economic news Wednesday, import prices were unchanged in December, despite the Wall Street estimate for a 0.5% decline and following a 0.5% drop the previous month. Export prices, however, slid 0.9%, the same as in November.
The reports come with markets anxious over the direction of Fed policy. Current market pricing anticipates the central bank enacting six quarter-percentage point rate cuts in 2024, twice what Fed officials indicated in December. Stronger-than-expected economic growth and inflation could force the Fed into keeping policy more restrictive.
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