Goldilocks end to inflation's threat

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news American data points to the soft landing the US Fed has been looking for as it seems to have successfully navigated the inflation transition.</p><p>But first we should note that President Xi has arrived in San Francisco for the APEC meeting, his first visit to the US in five years. The last time he was there, China's economy was in the ascendency and Trump was the US president. This time those factors have reversed. The Biden-Xi meetings have started but there are low expectations for immediate progress on the thorny issues facing them. Progress, if it comes, will come slowly in small steps.</p><p>Meanwhile, US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/11/15/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> had a rare rise last week, and mortgage interest rates were unchanged. But the rise was as much about <a href="https://tradingeconomics.com/united-states/mba-mortgage-market-index" target="_blank"><strong>the year-ago base</strong></a> as any strength this year.</p><p>American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices fell</strong></a> in October in something of a surprise retreat. But it was driven lower fuel prices so that is a definite upside. Their PPI fell -0.5% in October from September to be +1.3% higher than a year ago. Good prices went down -1.4% in the month, the first decrease since May mainly due to a -15% drop in petrol prices. Services prices were unchanged from the prior month. It is a good result that indicates the American inflationary impulse has probably passed.</p><p><a href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank"><strong>Retail sales decreased</strong></a> by -0.1