September 19th 2023 Weekly Economic Update

The Federal Reserve may have gained some traction against inflation, but the inflation problem is still top of mind for the Federal Reserve. As expected, inflation came in hot in August with consumer prices up 0.6% for the month, largely driven by a 5.6% surge in energy prices. In turn, this pushed the twelve-month change for the headline index up to 3.7% versus 3.2% in July. While this is a huge improvement versus the 8.3% of August 2022, it is still nowhere close to the Fed’s official inflation target of 2.0%. Industrial production surprised to the upside in August, rising for the second month in a row. Looking at the details, the strength in the report was broad-based with nearly every major category posting a gain. The largest sub-component, manufacturing activity, rose a tepid 0.1%. All of these reports/readings in addition to other news created mixed emotions in the market and will be looking for a bounce back in the week ahead.