Everyday Economics: Fed caught between persistent inflation, cooling jobs market.
Next week’s calendar is packed with major economic reports and influential Fed speeches. However, expect continued mixed signals, with data spanning manufacturing, construction, and the jobs report.
Spending on construction projects surprised to the upside at the end of 2024, driven primarily by a rebound in residential construction. In December, residential construction spending reached an annualized $939.5 billion – 1.5% (±1.3%) above November’s revised $925.5 billion estimate. This aligns with the strong rebound in housing starts at the end of 2024.
However, January’s unusual winter freeze is expected to dampen spending. That said, anticipation of new tariffs may have pushed some investment forward, mitigating the expected decline – despite the drop in housing starts for January. At the same time, persistently higher mortgage rates and a decline in the number of homes under construction could mean that residential spending may have already peaked and could be headed lower in 2025.
Source: EVERYDAYECONOMICS
