Inputs from the Philly Fed surveys for December

Philly Fed manufacturing and non-manufacturing data are decelerating

Philly Fed manufacturing survey for December

Current Philadelphia area manufacturing activity has drilled down toward recession levels, while optimistic survey respondents see a bounce coming.

Philly Fed manufacturing survey for decemberPrices are still elevated as the last vestiges of the previous inflationary operations cling to elevated levels, but with a deflationary trajectory.

Philly Fed manufacturing survey, prices

Philly Fed non-manufacturing survey for December

It’s not just manufacturing. The whole zone is decelerating, although as with manufacturing above there appears to be a little glimmer of hope for the future (they’d better not be basing that on soft Fed policy, but whatever…).

Philly Fed non-manufacturing survey

By my experience in manufacturing in my previous life I am not surprised that manufacturing prices are dropping more abruptly than services prices. But they too are declining.

Philly Fed non-manufacturing for december

Bottom Line

The graphs above show an easing into a Goldilocks situation. Inflation not too hot or cold. What a pleasant backdrop for a seasonal relief party, eh? Respondents are even bouncing in their future activity projections.

My bet is that one of two things (neither of which is Goldilocks) come about as the next major phase.

  1. Indicators do not pass Go, do not collect $200, they instead drop through an interim Goldilocks comfort zone into DEFLATION, or…
  2. The markets flip the hawking Fed the bird and resume a ‘Crack up’ style INFLATION.

My further bet is that #1 comes about before any thoughts of #2. But we shall see. Open minds and all.

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