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Economy (and Inflation) Starts 2023 Stronger than Expected

According to Fannie Mae, this week’s data releases suggest the economy started 2023 on a significantly stronger footing than we had expected. Starting with retail sales, the apparent jump in consumption coincides with a general loosening of financial conditions to start the year, a strong month of reported payroll gains, and an 8.7 percent increase to Social Security Cost-of-Living Adjustments. Still, we suspect there are ongoing issues with the seasonal adjustments around the holiday shopping season, as retail sales were reported to have jumped 5.5 percent in January 2021 and 2.5 percent in January 2022, both coming off negative December readings.

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