The Economic Week Ahead: February 12-16

Powell & Co. would like to see more evidence that inflation is falling toward their 2.0% target. They should get more of it this week. January's headline and core CPI inflation rates (Tue) should be 0.2% and 0.3% m/m, and 3.0% and 3.8% y/y, according to the Cleveland Fed's Inflation Nowcasting model. We will be focusing on these inflation rates excluding shelter (chart). They are already at the Fed's 2.0% target.

January's retail sales report (Thu) could be relatively weak. While payroll employment increased 0.2% during the month, the average workweek dropped 0.6%, while average hourly earnings rose 0.6%. This implies a weak 0.2% increase in private wages and salaries in personal income growth (chart).