{"id":7077,"date":"2026-02-06T18:14:00","date_gmt":"2026-02-06T18:14:00","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=7077"},"modified":"2026-04-02T23:56:28","modified_gmt":"2026-04-02T23:56:28","slug":"crowded-week-for-both-sides-of-fed-mandate","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-week-ahead\/crowded-week-for-both-sides-of-fed-mandate\/","title":{"rendered":"Crowded week for both sides of Fed mandate"},"content":{"rendered":"\n
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A second (partial) government shutdown ended this week, but not without disrupting the BLS release schedule. This will make for a crowded week, as we will get the delayed retail sales report for December,  the employment situation for January on Wednesday, and the January CPI report on Friday.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

After a slew of labor market data this week, we still expect to see 63k jobs added to the US labor market in January<\/a>\u2013slightly above our estimate of breakeven employment and<\/strong> consistent with a slight decline in the unemployment rate to 4.3%. <\/strong>Initial jobless claims were unseasonably low during the household survey\u2019s reference week (the week including January 12th<\/sup>), though data from the week ending January 31st<\/sup> suggests we may be witnessing some degree of normalization through the end of the month. ADP\u2019s January report was on the softer side, but we typically do not view the report as a strong indicator for nonfarm payrolls because of sample bias. Still, the ADP report highlighted that the bulk of weakness was concentrated in trade-exposed sectors and conversely, noted a surge in health care hiring \u2013 both aligned with our own assumptions for the January nonfarm payrolls report.<\/p>\n\n\n\n

Turning to the other side of the Fed\u2019s mandate, we have hopes that next week\u2019s CPI print will give us a cleaner snapshot of the US inflation backdrop in January. This will be the first release since the October government shutdown that is not directly impacted by October data omissions or a constrained November collection window. We expect to see core inflation accelerate in January to +0.4% m\/m, which would leave the y\/y pace steady at 2.6%.<\/strong> We look for lower gas prices to help headline, but still expect a 0.3% m\/m rise there, keeping the y\/y pace at 2.5%.<\/strong><\/p>\n\n\n\n

We are forecasting a hotter print for a few reasons. First, \u201cthe January effect\u201d remains a factor in the post-Covid economy. We typically see inflation heat up in January as the combination of new year price increases and lagged seasonal factors have elevated January prints since 2021. Second, we expect to see early signs of tariff passthrough to the consumer take hold<\/a>. December\u2019s PPI data pointed to pressures in trade and transportation and warehousing \u2013 the former suggests wholesalers are pre-emptively passing off higher costs and the latter suggests explicitly higher costs faced by producers. We anticipate these higher costs will translate to an uptick in consumer prices. Both ISM services and manufacturing highlighted continued price pressures and Adobe\u2019s digital price index (DPI) flagged an unusually strong January spike in online prices.<\/p>\n\n\n\n

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Here’s what else we\u2019re watching next week:<\/p>\n\n\n\n