October 23, 2025

QuickTakes

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).

At the same time, tensions are rising in Latin America. Venezuelan President Nicolás Maduro claims that his military has deployed 5,000 Russian-made anti-aircraft missiles amid growing US military activity in the Caribbean.

Meanwhile, the available economic indicators suggest that the economy, in general, and consumer spending, in particular, continue to grow despite concerns about the labor market. The Redbook Retail Sales Index rose 5.0% y/y during the October 17 week (chart).

The forward revenues per share of the S&P 500 Retail Composite has been rising at a faster pace in recent weeks, to fresh record highs (chart). This series is a reasonably good indicator of retail sales, which is available only through August.

No surprises here: Chips are hot! The Fed is still reporting industrial production, but the data are available only through August. Semiconductor output has been especially strong. Forward revenues for the S&P 500 Semiconductor industry continues to soar to new record highs (chart).

Intermodal railcar loadings continue to roll along at a relatively good clip (chart).

The growth rates of loans and leases at both small and large banks are increasing (chart).

The S&P 500 is marking time just below its October 8 record high of 6753.72. We are still expecting a Santa Claus rally in November and December that could take the index up to 7000. The latest readings of the Bull/Bear Ratios are mixed (chart).

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