Today's Scoop:

Hey friends, here's what you need to know today...

1. High prices have stalled consumer spending.

2. Business costs are coming down, though.

3. Falling mortgage rates have sparked a pickup in homebuying.

S&P 500: 3,928.861Mo: +3% | 1Yr: -13% | 5Yr: +40%

The market drifted lower today on clear signs of a slowing economy, despite more signs of inflation going away.

High prices have stalled consumer spending, the backbone of the economy. The Commerce Department reported retail sales were down 1.1% in December, the biggest one-month drop in a year. Shoppers avoided furniture, appliances, and other big non-essential items.

Business costs are coming down, which will help bring broad prices lower. The Labor Department’s Producer Price Index (PPI) [🤓] fell 0.5% last month. Food got less expensive for the first time in months, but egg prices soared 25%.

A drop in mortgage rates has sparked a slight pickup in home buying. The Mortgage Bankers Association said the average 30-year mortgage rate is about 6.2%, down from over 7% in October but still well above the 3.6% of a year ago. The drop in rates sent new home mortgage demand up 25% last week.

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Producer Price Index (PPI)

The Producer Price Index (PPI) is another important indicator for economists tracking inflation. Inflation is the rate at which things get more expensive.

Unlike the Consumer Price Index (CPI), which looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month, the PPI tracks the prices of wholesale goods - like how much Ford pays for the tires it installs in its cars before selling them to you. The rate of change in those prices is inflation.

Prices rarely decline. Inflation, aka rising prices, is only a problem when it's really fast. It's really fast right now. Business supply costs increasing by 5-10% per year is not manageable.