00:00Data quirks and all, how did you interpret the pieces we got today?
00:03Well, some of it distorted by the government shutdown, and some of it maybe people running
00:09out of gas at the end of the year in terms of the spending numbers. The inflation numbers
00:13affected by various categories in CPI and PPI, but remember these are December inflation numbers.
00:19Still, bad look for the Fed to be cutting rates when you've got the PCE core at 3% for
00:25the month
00:27of December. That's quite a ways from their target, and also we saw the PCE headline go up.
00:33The only other thing about it is, though, the Fed will have another PCE report plus more CPI,
00:38more PPI, and another employment report before their next meeting on March 18th. I might point
00:44out wages and salaries only rose two-tenths of a percent in the month of December, and that is
00:49a big decline from what we saw in November. Maybe that had something to do with why spending came
00:56in lower than anticipated. The number getting, of course, all of the headlines is GDP because it
01:02came in significantly lower than anticipated at 1.4%. Consumption fell off, and we see that reflected
01:10in those spending numbers. Business spending did rise, most of that for software and intellectual
01:16property, AI, I guess. Inventories and trade contributed only a fraction to the numbers this
01:23time. But the big question is, what happened with the government shutdown? The BEA says the government
01:28shutdown cost one percentage point to GDP. And the way they do this is very complicated, but basically
01:36they assume that since people aren't working and the government isn't paying them, they can subtract
01:42their wages from government spending. And that's how they figure out what the impact was. This will all
01:48come back because they all got back pay. So we'll see a rebound in the first quarter.
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