- Overall inflation based on the price index for personal consumption expenditures was 1.6% in 2019
- The January reading for the NFIB Small Business Optimism Index was among the top 10% of all readings in the survey’s 46-year history
- European industrial production fell 2.1% in Q4 2019, the steepest contraction since February 2016
Top Three Market Headlines
Fed Chairman Reports on the Economy: Federal Reserve Chairman Jerome Powell visited Capitol Hill last week to provide his semiannual report on the U.S. economy and monetary policy to a pair of U.S. congressional committees. The Chairman testified that the U.S. economy proved resilient to global headwinds that intensified last summer, highlighting, in particular, the strength of the labor market. At the same time, Mr. Powell noted that inflation remained below the Fed’s 2% objective throughout 2019, and cautioned that business investment and exports were weak during the second half of the year. Lastly, the Chairman said the central bank is closely monitoring the coronavirus, “which could lead to disruptions in China that spill over to the rest of the global economy.”
Small Business Optimism near Record Highs to Start 2020: Small business owners entered 2020 with a bullish attitude, as reported by the NFIB Research Foundation in its January Small Business Optimism Index report. The index rose 1.6 points from the prior month to 104.3, which fell within the top 10% of all readings in the 46-year history of the survey. Six of the 10 index sub-components improved, including strong increases in sales expectations and business investment. More than a quarter of owners reported that finding qualified workers was their most significant problem, and historically high percentages of owners plan to raise wages in an attempt to fill open jobs.
European Industrial Production Slips: Business conditions deteriorated across European industrial companies late last year, as industrial production—a measure of the volume of output at factories, mines and public utilities—fell 2.1% across the Euro area in December. The decline was keyed by a 4% plunge in capital goods output, the steepest contraction in the sector since February 2016. Pressure was seen across the monetary union, as Germany, France, Italy and Spain all experienced production contractions exceeding 2%. Amid uncertainty about the impact of the coronavirus on European manufacturers’ exports and supply chains, economists have lowered their expectations of Eurozone growth just a month ahead of the European Central Bank’s next monetary policy meeting.