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Week In Review


The consumer price index rose 0.5% in January, while the producer price index increased 0.4%. Year-over-year, consumer prices are up 2.1% and producer prices have risen 2.7%.

Our Take

While headline inflation remained close to the Fed’s desired 2% target, rising energy prices had an outsized effect. January energy prices rose 3.0% and core CPI (excluding food and energy) rose just 0.3%. Year-over-year, core consumer prices are up 1.8%. Nothing in this month’s inflation report will likely alter thinking at the Fed.

Retail Sales

Retail sales dropped 0.3% in January, while December sales were revised to flat from the formerly reported +0.4%.

Our Take

Retail sales results were considerably below expectations. The report effectively erased all recent strength and calls into question the health of the consumer. This is important, as consumers make up almost three quarters of the economy. While retail sales reports are often subjected to rather large revisions, January’s report is decidedly negative.


Puerto Rican officials announced this week that the island could have a $2.8 billion surplus through 2023. The island’s fiscal plan released on Tuesday indicated that the surplus could be used to start paying down restructured debt within two years. Creditors remain skeptical, as the plan does not detail which bondholders will be paid.

Our Take

The release of the fiscal turnaround plan provided additional details for creditors. An oversight board still needs to certify the recovery plan. While Puerto Rico’s recovery has been boosted by federal aid that the island is due to receive as a result of the fall hurricanes, the island continues to struggle with its debt burden.