Economy Still Moving Forward

The government shutdown continues to shut off the supply of many economic indicators. Tomorrow's CPI inflation rate for September is an exception. It is widely expected to remain stuck at 3.0% on a y/y basis. Based on a few conversations with friends about their businesses, we won't be surprised if the CPI is hotter than that, since President Donald Trump's tariffs may still be boosting prices of consumer durable goods.

Helping to hold down the headline CPI inflation rate during September were falling consumer energy prices. Today, however, oil prices surged 6% after President Trump imposed sweeping new sanctions on Russia's two largest oil producers, Rosneft and Lukoil. They marked the first severe Ukraine-related sanctions of Trump’s second term—and a significant shift from his earlier reluctance to target Moscow's energy industry (chart).