Chart of the Day: Economic Activity Is Contracting

Expectations for a soft landing are on the rise, but this week's data show a lackluster finish to 2022

Why it matters: We are seeing more evidence that economic activity peaked in 2022. Real retail sales peaked in February, housing starts peaked in April and industrial production peaked in September (which is when aggregate hours worked also hit its high). Weakness is increasingly broad-based and not isolated in just a few sectors of the economy. Hopes for a soft landing are likely to be dashed and the market will increasingly see bad economic news for what it is: bad news.

By the numbers:

• Industrial production contracted in 3 of the last 5 months of 2022. 3-month change as of December: -5.2%

• Real retail sales were down in 6 of the last 8 months of 2022. 3-month change as of December: -6.7%

• Housing starts fell in 6 of the last 8 months of 2022. 3-month change as of December: -20.8%