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Daily update

  • French fourth-quarter GDP came in very slightly stronger than expected, with a 0.1% increase in activity. This follows from a drop in the German data yesterday—although every preliminary German GDP release in 2022 was subsequently revised higher. Consumers are dragging down economic activity as negative real wage growth starts to overwhelm the willingness or ability to leverage household balance sheets.
  • French consumer price inflation for January is expected to rise (in year-over-year terms). German data was due but publication has been delayed for technical reasons. The annual reweighting of the consumer price calculation should increase the importance of energy prices, and these will drag inflation lower as the year progresses.
  • UK consumer credit data is of some interest as UK consumers slowed the leverage of their balance sheets earlier than other economies’ consumers. The data is expected to show a further moderation of credit growth.
  • The US employment cost index for the fourth quarter is expected to slow slightly. This does not measure labor cost pressures for inflation—as the number of people employed and how hard those people work also needs to be factored in—but it does give some sense of pay bargaining power.

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