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Weekly economic review & outlook
Inflation surprises to the upside

AUG. 17, 2020

You Need to Know

Week in review

Core inflation surges in July but it could be temporary

The overall and core CPI each rose by 0.6 percent, pushed up by energy prices and outsized gains within a few categories disrupted by COVID-19.

Retail sales recover quickly from the shutdown plunge

Spending rose by a further 1.2 percent for July, continuing a rapid rebound in retail sales from the record declines of March and April.

Week Ahead

Forecasts

Housing starts set for another solid gain

Demand for new homes is very strong and building permits were up in June, suggesting solid growth for housing starts in July.

Existing home sales could approach pre-COVID level

Improving demand factors and a 14-year high for pending home sales in June should result in a second straight outsized jump in the pace of existing home sales.

Weekly initial jobless claims expected to fall for a third straight week

We project initial jobless claims for the week ending August 15 to drop to 895,000. While this is still high from a historical perspective, it is roughly six million fewer than the all-time high set in late March.

The consumer price index (CPI) jumped by 0.6 percent for July as rising energy prices again helped to lift monthly inflation. This pushed up the 12-month trend rate of inflation to 1.0 percent — the fastest pace in four months, although still very low. With weaker monthly comparisons from August and September of last year, the trend rate could edge a bit higher in the months ahead.

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