- The CPI rose 7.5% on an annual basis in January, its fastest pace since 1982
- The NFIB Small Business Optimism Index decreased to 97.1 in January
- The University of Michigan Index of Consumer Sentiment has fallen more than 20% from a year ago
Top Three Market Headlines
Inflation Hits a Fresh 40-Year High: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.6% in January from the prior month, which put the annual increase at 7.5%, the highest reading in four decades. The "core" CPI, which excludes energy and food costs, measured a 0.6% increase on the month and rose 6.0% on an annual basis, slightly higher than the 5.5% pace seen in the previous month. The largest contributors to the January CPI increase included food, housing rental prices, vehicles, shelter, and electricity.
Small Business Optimism Recedes: Small business owners' outlook on the economic environment deteriorated in January, according to the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index, based on surveys of small business owners, dropped to 97.1 in January, the lowest level since February 2021. Of the 10 components that make up the index, seven declined, including future sales expectations. Rising costs for labor and materials remained a pressing concern among respondents, with 61% of business owners reported raising average selling prices in response, the highest percentage since 1974.
Consumer Sentiment Index Hits Decade Low: U.S. consumers have become increasingly glum about current and future economic conditions, according to the Index of Consumer Sentiment published by the University of Michigan. The latest Index reading, released last week, was down more than 20% from a year ago and hit its lowest level in over a decade. A key cause of the recent declines in sentiment, according to the survey, is weakening financial prospects driven largely by rising inflation, with almost half of consumers indicating they expect their inflation-adjusted incomes to fall in the upcoming year.