NEW YORK (AP) — The upcoming week promises to deliver notable updates on inflation, a topic sure to dominate the U.S. midterm elections now less than a month away. A separate report will show how retailers are faring in an inflationary environment, while the nation’s biggest banks roll out financials details from the most recent quarter.
The price of oil will be front and center as the U.S. war with Iran drags into its eighth month. Renewed violence has sent oil prices back above $100 per barrel and average gasoline prices remain well above $4 per gallon, while diesel remains just below the record high prices reached in September. That has all fueled inflation, putting more pressure on household budgets and businesses.
Here’s a look at some of the events that will be front and center in the week ahead.
Good news for the US housing sector may be that things have not gotten worse
No news is good news lately in the U.S. housing market. On Tuesday, the National Association of Realtors reports existing home sales for September, and economists believe sales held steady from August. But August was awful, with sales declining to their slowest annual pace in more than a year. Prospective home buyers are being thwarted by rising mortgage rates which, as Freddie Mac reported Thursday, marched higher for the seventh consecutive week. The average long-term U.S. home loan rate is now higher than it’s been in nearly three years. The housing sector has been in a slump since 2022 and sales of previously occupied homes were essentially flat last year, stuck at a 30-year low.
Inflation does not appear to be going away soon
The U.S. reported last month that inflation accelerated in August as gas prices spiked in the wake of renewed fighting in the Middle East. More of the same is expected for September with all sides in the Iranian conflict unwilling to concede ground. The Labor Department is expected to report Wednesday that its consumer price index rose by two-tenths of a percent month over month and rose 3.6% compared with a year ago at this time. A day later, the department will release its producer price index — which captures inflation before it reaches consumers. Same story there. Economists expect an increase from the 5.4% registered in August, which was up from 4.8% in July. Last week, PepsiCo said it was raising prices on Doritos and other favorites, citing rising costs for fuel, aluminum and commodities.
Shopping is still hot for US consumers, but economists expect less of it
Economists believe that Americans pulled back on shopping in September with the holiday shopping season just around the corner. Most expect a 0.65% bump. That said, consumers surprised just about everyone in August. As they griped about higher prices at the pump and at the grocery store, Americans spent heartily, expanding retail sales by 1.2%, nearly twice what forecasters had expected. Also next week, the National Retail Federation releases its forecast for the holidays.
Banks expected to report more profit gains amid volatile stock market and consumer spending
Banks have notched record profits this year as their trading desks benefit from a volatile stock market while the U.S. war with Iran drags on. Big swings in markets tend to increase activity on trading desks, leading to higher commissions and fee revenue for the banks. Meanwhile, consumers keep spending despite pressure from high prices, and that helps boost fee and lending revenue.
Wall Street expects more of the same from the third-quarter updates. Analysts expect JPMorgan Chase to report a 47% boost in profits and Citigroup to report a 61% profit jump when both release earnings Tuesday. Bank of America is expected to tally a profit gain of 36% when it announces results Wednesday. Several other banks and financial institutions, including Morgan Stanley, will also report results during the week.
Households and businesses are also facing high interest rates that allow banks to charge more for loans and that won’t likely change anytime soon. The Federal Reserve recently raised its benchmark interest rate in an effort to cool inflation and is leaning toward another rate hike by the end of the year.
