QUICK QUILL — NFIB price and inventory sentiment metrics reinforce both the lack of further progress for disinflation and the Fed’s wait-and-see mode. However, capex and inventory plans point to downside risks for the near-term U.S. growth path also consistent with a rising left-tail opinion about “Poor Sales” that validates U.S. households’ rising anxiety about a rising unemployment rate, which conflict with the flat projections brandished by the forecasting community and the Fed. These fundamental Main Street risk favor a tactical bull steepener.
TAKEAWAYS
- While NFIB Future Sales and Future Economy Expectations are at an elevated 20 and 47, respectively, Future Inventory Plans have regressed from their Q4 pre-tariff bump; the reality paired with Current Sales at -14 leaves us skeptical of a rebound in GDP for real inventories
- NFIB Capex Plans fell 7 points last month, the largest MoM drop in data back to 1986 and flagging a triple dip on a YoY basis; with the uncertainty gauge rising 14 points to 100, the third highest print on record, real business investment looks to be under pressure to kick off the year
- NFIB Poor Sales came in at 9% in January, below the 12% long-run average but nonetheless, triple the cycle low; the series’ tight 0.85 correlation with the unemployment rate predicts upward motion in the official gauge, contrary to the Fed and sell-side’s flat consensus