The week ahead will feature Nvidia's earnings report after the market closes on Wednesday. That may be more important to the stock market than any of the economic indicators to be released during the week. Last week, Elon Musk's artificial-intelligence startup, xAI, unveiled its latest AI model, Grok 3, claiming it outperforms DeepSeek and OpenAI models across various benchmarks. The firm utilized 200,000 GPUs to run the model! That suggests that the demand for Nvidia's number-one product remains strong.
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February 23, 2025

QuickTakes

ECONOMIC WEEK:

February 24–28

cal

The week ahead will feature Nvidia's earnings report after the market closes on Wednesday. That may be more important to the stock market than any of the economic indicators to be released during the week. Last week, Elon Musk's artificial-intelligence startup, xAI, unveiled its latest AI model, Grok 3, claiming it outperforms DeepSeek and OpenAI models across various benchmarks. The firm utilized 200,000 GPUs to run the model! That suggests that the demand for Nvidia's number-one product remains strong.

 

Consider what else is up ahead this week:

 

(1) Personal income & spending. Our Earned Income Proxy rose 0.4% m/m during January. It was weighed down by a sharp drop in the average workweek, which we think might have been weather related. That also explains why retail sales fell 0.9% last month (chart). So both personal income (Fri) and consumer spending (Fri) were likely weak last month, though the latter might have gotten a boost from consumer spending on services.

avg weekly hrs

(2) PCED inflation. January's PCED (Fri) inflation rate won't be as hot as was the CPI that month. According to the Cleveland Fed's Inflation Nowcasting, the headline and the core PCED inflation rates are likely to be 2.51% and 2.66% y/y (0.38% and 0.37% m/m). The headline and core CPI inflation rates were 3.0% and 3.3% y/y in January (chart). Inflation remains stuck just above the Fed's 2.0% inflation target, suggesting that the Fed's rate-cutting pause could last for a while.

consumer pxs

(3) Regional business surveys. We are expecting February's Dallas (Mon), Richmond (Tue), and Kansas City regional Fed bank M-PMIs to show strong manufacturing orders and production. They should confirm the strength shown by the NY Fed and Philly Fed surveys last week. That would imply that February's M-PMI remained above 50.0 for the second month in a row (chart).

MPMI vs NY Philly

The bad news is that the three remaining business surveys will probably show higher prices paid and received, as in the NY and Philly Fed bank surveys (chart). Overall, we see the rebounding manufacturing sector as an unequivocal positive for the economy. 

regional bus surveys

(4) Consumer confidence. Stock prices fell sharply at the end of last week, partly because the inflation-sensitive Consumer Sentiment Index (CSI) fell sharply this month, though mostly along partisan lines. Democrats feared the inflationary impact of tariffs much more than Republicans. If the Consumer Confidence Index (CCI) (Tue) comes in above 100.0, stock prices would likely brush off the CSI (chart). But a plunge in the CCI would likely exacerbate fears over the consumer and extend the stock market's pullback.


We expect a solid reading in the CCI because it tends to reflect labor market conditions more than does the CSI. Our forecast should be confirmed by the "jobs plentiful" series included in the CCI survey.

consumer confidence

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