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Why economists need the paparazzi

| Posted by: Paul Donovan | Tags: Paul Donovan

  • German headline consumer price inflation should remain close to 1% year-on-year; the rise from the low of -0.3% y/y reflects oil base effects (ex-energy German CPI has hovered around 1.1% y/y). The ECB has always said it is the headline that matters on the way down; so presumably, the headline also matters on the way up.
  • Japanese consumers have once again been a little underwhelming in their enthusiasm for spending money. In spite of low unemployment, wage growth remains lackluster. That low wage growth, combined with rampant inflation expectations, may well dampen consumption.
  • UK credit data is due, and may offer some hints as to the resilience of domestic demand in the face of EU membership uncertainty. Market information about the government's EU plan now depends on paparazzi long distance photographs of scrawled memos – this is not a terribly transparent way of doing business.
  • Revised US third quarter GDP is due, though no significant change is expected. It is not wise to extrapolate too much from this data – too many policy changes seem likely. The price deflator may be worth a glance as the new administration's policies are likely to increase inflation.