All posts by joel

October Existing Home Sales

KEY DATA: Sales: -3.4%; 1-Family: -3.7%; Condos: -1.6%; Prices (Year-over-Year): +5.8%; Inventories: -2.3%

IN A NUTSHELL: “Home sales have been bouncing around and one of the reasons may be the lack of homes on the market.”

WHAT IT MEANS: The existing housing market is a key segment of the economy in no small part because a purchase usually triggers additional purchases of a variety of residence-related goods. To get back to strong economic growth, housing demand needs to be solid. Existing home sales have been rising this year, but in fits and starts. After hitting the highest pace in eight years in July, the level has flattened out. Still, we are looking at a 2015 sales pace that should be the highest since 2006. The National Association of Realtors reported that demand declined in October. There was a sharp reduction in sales in the West, a more modest one in the South and very little or none in the Midwest and Northeast. Purchases of single-family units fell more rapidly than condos. As for prices, they continue to rise solidly in most regions except for the Northeast. The price data are not seasonally adjusted so you have to compare to the same month in previous years. Doing that, the October price level was the second highest October on record, exceeded only in October 2005, the peak in housing prices during the bubble. That pretty much indicates that at least on the price side, conditions are normalizing. One issue, though, continues to overhang the market. The supply of homes on the market is relatively low. That lack of choice may be keeping sales down

MARKETS AND FED POLICY IMPLICATIONS: The housing market is in decent shape but could be a lot better is people decided they were ready to move and listed their homes. But the real issue for housing is what will happen when rates start to rise. It looks like December is when the Fed will start increasing rates and variable mortgage rates should follow. Assuming the markets believe the FOMC that inflation will trend back to 2% in the medium term, longer-term rates could rise as well. As I have argued previously, I think that at least initially, sales should rise. Buyers will have to start factoring into their purchase calculus the simple fact that mortgage costs could be increasing. That should cause some to make decisions that they were able to put off when rates were stable. Realtors have reported that there are lots of “lookers” and fewer “buyers”. That should change when mortgage rates start rising. But one of the long-term costs of the extended low rate environment is that many homeowners have refinanced into very low mortgage rates. Are they going to be willing to move and trade those low rate mortgages for higher rate mortgages? To the extent that low inventories are a problem for the market and that the churn needs to return before sales reach trend levels, the extensive amount of refinancing into historically low mortgage rates may slow the market’s return to normal.

October Housing Starts

KEY DATA: Starts: -11%; 1-Family: -2.4%; Multi-Family: -25.1%/ Permits: +4.1%; 1-Family: +2.4%; Multi-Family: +6.8%

IN A NUTSHELL: “Home construction has been up, down and all over the place this year, but the trend is still upward, at least slowly.”

WHAT IT MEANS: The curse of this expansion is that the moderate pace has meant the economic data bounce around like crazy. That has been the case with the construction data and we saw that once again with the latest housing starts numbers. And once again, the headline number hid what was happening. On the surface, it appears that builders slowed their pace of construction in October, but let’s go to the details. Single-family construction eased only modestly. The big decline was in multi-family activity and if there is one thing we know, that component is the epitome of volatility. Indeed, the huge October drop came after a robust 18% rise in October. Over the past year, multi-family starts have ranged from a low of 300,000 units annualized in February to a high of 524,000 units in June – and these are seasonally adjusted numbers! So, let’s not take too much from the October decline in starts. Will construction pick up? The October permit requests were about 8.5% above the starts number and for the past three months, permits have been running a little ahead of the building pace, so don’t be surprised if housing activity rebounds solidly in November. And if the strong rise in the Mortgage Bankers Association’s mortgage applications numbers are any indicator of demand, that should happen. Purchase mortgage applications are running about 15% above last year’s levels. Builders should see their fair share of that new demand.

MARKETS AND FED POLICY IMPLICATIONS: Housing is a key sector in the economy and housing sales and starts are still improving. They may not be where most of us would like to see them, but there are factors at work that may be constraining home demand. Housing formation is a major factor in sales and that has been lagging. Younger workers are burdened by high school loan payments. Boomers are bailing out of their homes and may not be looking for new product. Simply imposing past trends on current patterns without making adjustments for changing conditions may not shed a whole lot of light on the state of the housing market. While housing sales and starts may be below desired levels, they may not be that bad if the demographic trends are factored in. That is similar to the situation with the labor force participation rate. Failing to recognize that changing demographics are affecting the labor supply allows people to complain about the decline in the participation rate. But it could be that given the demographic trends and the changing structure of the job market, the decline may not be far from what would have been expected. And that goes for economic growth as well. We would all love to see 4% or even 5% growth. However, trend growth has fallen to less than 2.5%, so those robust growth rates are not likely to be seen. The Fed members understand this and that is why they are likely to believe the economy is currently strong enough to absorb a rate hike fairly easily.

October Consumer Prices, Real Earnings, Industrial Production and November Home Builders’ Index

KEY DATA: CPI: +0.2%; Excluding Food and Energy: +0.2%/ Real Earnings: +0.2%/ IP: -0.2%; Manufacturing: +0.4%/ NAHB: -3 points

IN A NUTSHELL: “With consumer prices stabilizing and manufacturing rebounding, the barriers to a Fed tightening continue to come down.”

WHAT IT MEANS: Inflation is coming back, at least a little. The Consumer Price Index rose moderately in October and that was the case in almost any way you sliced and diced the data. For the first time in a while, there were significantly more categories posting gains than declines. Even gasoline prices were up, which was a surprise since the Energy Information Agency had costs declining. Food costs edged upward, but the real gains were found in shelter and medical care. People buying vehicles got a break on prices. Look for more vacation car trips as airfares soared. The strong dollar probably helped drive down apparel costs, but it doesn’t look as if the falling import prices are being passed on greatly to consumers. Importantly, services prices continue to rise at a moderate pace and as I have mentioned so many times before, this is over 60% of costs. Over-the-year, services prices are up 2.4% and excluding energy services, the rise in now at 2.8%. So much for no inflation.

Inflation-adjusted wages rose moderately in October. Importantly, average hourly wage gains are accelerating, a sign that the tight labor market is starting to force firms to raise wages.  

Manufacturing has been weak lately but that seems to be changing. Cut backs in energy production and a warm October that limited utility output may have caused overall industrial to decline, but there was a solid rise in manufacturing production, especially durable goods. Output of consumer goods, business equipment and industrial supplies all improved.

The National Association of Home Builders/Wells Fargo builder sentiment index declined, though it remains at a level consistent with moderate activity. Builders seem worried that potentially higher mortgage rates will slow sales, though the opposite could happen.

MARKETS AND FED POLICY IMPLICATIONS: Tomorrow, the “minutes” from the October FOMC meeting are released. Low inflation and what was perceived to be at the time slowing job gains were likely key factors in the decision to do nothing. Well, the recent data are now on the side of a Fed rate hike in December. Inflation is not decelerating and there could be a real shocker come early next year as the huge declines in energy prices disappear: It is possible that the year increase could be above 1.5% in January, not the 0.2% rise in October. With the core at 1.9%, the Fed’s inflation target is really not that far away. In addition, we have seen that job gains are back on track, wage gains are accelerating and manufacturing is starting to recover. In other words, everything seems to be coming together for those at the Fed who want to start normalizing rates. Investors really need to come to grips with the likelihood that interest rates are going up and the first rise could come in four weeks.

September Consumer Prices, Real Earnings and Weekly Jobless Claims

KEY DATA: CPI: -0.2%; Excluding Energy: +0.2%; Gasoline: -9%; Real Earnings: +0.1%/ Claims: 255,000 (down 7,000)

IN A NUTSHELL: “Outside of energy, inflation is already at more normal levels.”

WHAT IT MEANS: Since inflation has generally been the Fed’s major worry, the September Consumer Price Index should provide some clues to the direction of consumer prices. Household costs fell in September, led by another sharp decline in gasoline prices. Excluding energy, price rose moderately. Indeed, over the year, consumer prices are up 1.9% when just energy is excluded from the index. That is not to say gasoline and fuel oil don’t count: They most definitely do. But it is not very likely that energy commodity prices will fall over the next year by the 30% they dropped in the past year. As for the details of the report, they were mixed. Food prices are bouncing back. Critically, cake and cupcake prices jumped. I was devastated. After solid increases in August, apparel and medical care expenses declined. We are still seeing a drop in used car costs, the result of so many vehicles being traded in for new ones. And finally, the services segment of consumer costs continues to accelerate. Few may focus on this grouping, but it does constitute over 60% of the index. Over the year, non-energy related services costs are up 2.7%, which is hardly tame. Shelter is leading the way, which shouldn’t surprise anyone trying to rent an apartment.

The declining consumer prices helped keep household spending power from falling in September. Real hourly earnings rose slowly as the modest decline in wages – which was odd -was more than offset by the drop in prices.

Unemployment claims fell to the lowest level since November 1973. Adjusting for the labor force size, we are at historic lows. Clearly, the labor market is continuing to tighten.

MARKETS AND FED POLICY IMPLICATIONS: One of my favorite phrases is: “The answer to all economic questions is: It Depends!” That is so true when it comes to the question: Is inflation too low? It depends upon which index you use. If you use the top line CPI number, it appears that consumer costs are going nowhere. But the huge fall in energy costs, which is the prime factor in the low inflation rate, is not likely to be repeated. Excluding that wildly volatile commodity, low inflation is not an issue, unless you expect similar massive declines in oil prices going forward. If, over the next year, energy prices are flat and we get the exact same changes in all other categories, next September’s inflation rate would be 1.9%. That is why many are saying that the Fed’s inflation target could be reached next year.   Indeed, the tight labor markets are already driving up wages. Over the year, real hourly wages rose by 2.2% in September. In September 2014, the yearly gain was only 0.4%. With the unemployment rate likely to fall below 5% soon, wages will be rising a lot faster next year. Will rising wages trigger higher inflation? That is really the issue the Fed is struggling with and how the members answer that question will determine when they start to increase rates.

September Retail Sales and Producer Prices

KEY DATA: Sales: 0.1%; Excluding Vehicles: -0.3%/ PPI; -0.5%; Goods: -1.2%; Energy: -5.9%; Excluding Food and Energy: 0%; Services: -0.4%

IN A NUTSHELL: “Consumers have become more cautious, though lower prices are helping keep their total spending down.”

WHAT IT MEANS: Is the economy growing strongly or softly? The answer, if you believe the data, is yes. On the surface, the September retail sales report looks pretty disappointing. But the details don’t necessarily indicate that. Households bought lots of big-ticket items such as vehicles and furniture, but didn’t hit the appliance or electronics store at all. Sales of clothing and sporting goods surged but spending at gas stations, supermarkets and home stores was off. We didn’t buy online but boy do we like to eat out. So what do we make of this? First, it is good to see that there is enough confidence so buy expensive products. Also, these data are not adjusted for prices, so the fall in gasoline sales and at supermarkets may be more a function of declining costs rather than unit sales. Indeed, the average price of gasoline fell nearly 10% in September but sales of gasoline were down only 3.2%. It looks like we were enjoying driving again and at a lower cost! I suspect the inflation-adjusted numbers will look much better than the unadjusted ones.

On the inflation front, the ability to buy more but still pay less for some products looks like it is not going away soon. Wholesale prices fell sharply, helped by another huge decline in energy costs. For the eighth time in eleven months, food prices declined. If you drive and eat, you are doing pretty well. In addition, services costs, which had been rising moderately, took a turn downward. And if you look at the special indices, which break out wholesale prices by just about every combination possible, it was almost impossible to find one that had a positive sign. Even my beloved bakery product prices are going nowhere. There are also no price pressures in the pipeline, as intermediate and crude costs were down. About the only place there is any inflation is in finished consumer goods less food and energy. This index rose moderately in September and over the year, it was up 2.6%.

MARKETS AND FED POLICY IMPLICATIONS: The economy is still in good shape but it is hard to make the case that it is booming. Can it absorb some rate hikes? Undoubtedly. Retail sales are still solid enough that consumer spending will be strong in the third quarter. But it is inflation that is the real issue. The “sturm und drang” at the Fed over China notwithstanding, it is the uncertain course of inflation that could keep the FOMC from hiking rates this year. Unfortunately, the gang that cannot communicate straight is still sending out as many unclear signals as possible, so we will simply have to wait until the statement is released on December 16th to really know if rates are going up. It is highly unlikely anything will be done at the October 27-28 FOMC meeting. As for the markets, today’s numbers will likely be viewed as showing economic weakness, though I don’t’ think that is entirely accurate. Is that good or bad for equity prices? Got me, though the recent theory is that what is good for the economy is bad for stocks. Crazy, I know. But the soft inflation data should keep interest rates down.

September Import and Export Prices

KEY DATA: Imports: -0.1%; Nonfuel: -0.3%; Exports: -0.7%; Farm: -1.1%

IN A NUTSHELL: “The disinflationary impacts from falling import prices is easing, but it has not gone away.”

WHAT IT MEANS: The Fed can live with the current state of the domestic economy, even if it continues to be worried about international activity. But what is causing some members to want to wait before raising rates is low inflation. Declining energy and commodity costs, coupled with falling nonfuel import prices, have combined to keep inflation well below the Fed’s 2% target. Today’s import price numbers don’t provide a whole lot of support for the belief that inflation will pick up anytime soon. Import costs fell only modestly In September as energy prices actually rose. That was a change. But excluding petroleum, there are still some decent downward pressures. Indeed, we saw food, nonfuel industrial supplies and capital good prices ease in September. Vehicle costs were flat and the rise in consumer goods prices was minimal. Previous declines in energy costs are still working their way through the system, so price declines are likely for a while, even if energy prices keep rising. On the export side, the problems facing the agricultural sector continue as the prices for farm products overseas just keeps going down. Food export prices have fallen by over 14% during the past year and that has to be eating into the farm belt’s income.

MARKETS AND FED POLICY IMPLICATIONS: It was nice that the import price declines are moderating, but they haven’t turned positive just yet. The strong dollar is making sure that import prices and thus U.S. inflation remain low. Thus, there is little reason to expect that inflation, at least as measured on a year-over-year basis will move up to 2% soon. But stable or even slowly rising energy prices will allow monthly changes to become positive and that could provide some basis for the argument that inflation will reach the Fed’s target in due course. Basically, we don’t know what the Fed will do and when they will do it. Heck, we don’t even know what ‘it’ is. Minneapolis Fed Bank President Kocherlakota said we should be cutting rates, not raising them. I didn’t realize that the current level of rates was restricting borrowing and therefore economic activity. You learn something new each day. Anyway, the Fed will likely do nothing at the October 27-28 meeting so the focus of attention is on the October and November jobs reports that come out before the December 15-16 meeting. They have to be strong if the Fed is to raise rates before the end of the year, as many keep saying is a possibility.

August Trade Deficit and Home Prices

KEY DATA: Deficit: $48.3 billion ($6.5 bil. wider)/ Home Prices (Year-over-Year): 6.9%

IN A NUTSHELL: “The stronger dollar is beginning to bite into exports and the trade deficit is soaring as a result.”

WHAT IT MEANS: When you have the one solid economy in the world and your currency is rising, you start to price your goods out of the market that is precisely what is happening.   U.S. exports fell sharply in August, declining by over 3%. The only category that posted a gain was capital goods, as aircraft shipments surged. Otherwise, we saw declines in sales of food, consumer goods, vehicles and industrial supplies. Oil was down, but that was more a price issue than a demand slowdown. Meanwhile, we bought a lot of goods from the rest of the world. Indeed, demand for almost everything except vehicles and petroleum rose. Looking across the world, it is hard to find a country that bought more of our products. But, lots of countries ramped up their sales to us. Not surprisingly, Chinese exports to the U.S. rose sharply while their purchases of U.S. products continued to decline. This is not a new trend: It has been going on for about a year now. Actually, that is a pattern that has emerged with other major trading partners such as Mexico and Canada.

While the world may be having issues, the U.S. economy, especially the housing market, is not. CoreLogic reported that home prices surged 1.2% in August and were up by nearly 7% over the year. A growing number of metropolitan areas are now considered to be “overvalued”. The strong price increases are lifting a lot of boats from underwater to good condition. That should create increasing numbers of homes on the market and since inventory has been a restraining factor, sales should rise. But as more resales hit the market, housing starts increase and ultimately mortgages rise, the price increases should moderate.

MARKETS AND FED POLICY IMPLICATIONS: The U.S. is the market of last resort and foreign companies are shipping everything they can over here. At the same time, the dollar is creating pain for our exporters. Though trade should restrain third quarter growth, domestic economic conditions are still quite good. When you adjust for prices, exports may be slipping, but they are hardly crashing and burning. Firms are fighting hard to keep their share of the foreign markets. Also, housing remains quite strong. While others bemoan price increases, I keep arguing that people can sell their homes only if they have enough equity to allow them to sell. Nothing helps housing supply more than rising prices, so I am happy to see the increases and see that they are spreading across the nation. As for the markets, isn’t it great that the investors think bad news is good news? Who cares what that really means: All that matters is the Fed may put off raising rates and the liquidity will keep on rolling into the financial markets. Yes, I am being sarcastic. Do these data have any implication for Fed policy? Probably not. Former Fed Chair Ben Bernanke comments this week were taken to imply the Fed is on hold for a long time, or at least until the 2% inflation target is clearly in sight. Mr. Bernanke was a great crisis manager, but clueless about the economy when it was not in trouble. Remember, he claimed the housing bubble was slowly deflating. Enough said.

September Employment Report

KEY DATA: Payrolls: +142,000; Revisions: -59,000; Manufacturing: -9,000; Government: +24,000; Unemployment Rate: 5.1% (unchanged); Participation Rate: -0.2 percentage point; Hourly Earnings: -$0.01

IN A NUTSHELL: “Is the jobs machine running out of gas?”

WHAT IT MEANS: Most economists thought the September jobs report would be pretty decent. Boy, were we wrong. Instead, it was ugly. Not only were the job gains well below expectations, but the previously reported July and August increases were revised downward. In the third quarter, hiring averaged only 167,000 per month. That is the weakest three-month average in 2½ years. And the details were just as disappointing. The problems in the oil patch and slowing exports led to layoffs in the manufacturing and mining sectors. In September, that reduced payrolls by 21,000 after a 40,000 decline in August. Still, the rest of the economy didn’t hire at a breakneck pace. There were decent increases in health care, retail, entertainment, residential construction and restaurants, which are all consumer-related sectors. Professional and business services also were up solidly. But finance, wholesale trade, transportation were weak. That was odd since you would think these sectors would be supporting what looks like solid consumer activity. Public sector payrolls were up sharply and we shouldn’t count on that happening too often. A drop in the workweek, a slowdown in overtime hours and a slight decline in the average wage all added to the impression that September was not a good month for the labor market.

It was nice that the unemployment rate remained at 5.1, but the details were not what you would like to see. The labor force fell sharply and that is hardly a sign of a robust labor market. These numbers are extremely volatile but this drop was large nonetheless. With the labor force down, it was not surprising that the participation rate also fell.

MARKETS AND FED POLICY IMPLICATIONS: Why have businesses reduced hiring activity? This report was a downer even if you add back the job losses caused by the weakness in the oil-patch and exports. But manufacturing and exports don’t make up a huge portion of payrolls. Meanwhile, domestic demand seems to be strong. September vehicle sales will exceed the 18 million units annualized mark for the first time in over a decade. Housing seems solid and the summer tourism season looks to have been strong. Consumers are spending, yet business confidence is sinking. So we have a dichotomy: The U.S. consumer is carrying the load but firms are being cautious in their hiring. Or at least that seems to be the case. Another explanation is that companies are trying to hire but they are not finding workers with the desired skills who are willing to take the pay being offered. In other words, it is not an issue of demand but of supply. Or, maybe, the numbers are just strange. If you believe the oil-patch/export theory, it would be large firms who are doing the cutting. But ADP had large firms doing most of the hiring in September. Also, the National Federal of Independent Businesses survey indicated that small firms are hiring near the pace we saw last year. The Bureau of Labor Statistics may not be doing a good job capturing these hires. I just don’t know, but the strong consumer and soft hiring divergence is a conundrum. And when you get conflicting indicators, the best policy is to simply wait and see, which is what the Fed will likely do. So any chance of a hike in October is gone and unless the next two employment reports released before the December meeting reverse the impression created by the last two, we might not even get a hike in December, regardless of what the Fed Chair has been saying.

September ADP Jobs Estimate and Help Wanted Online

KEY DATA: ADP: 200,000; Manufacturing: -15,000; Construction: +35,000/ Help Wanted: -138,500

IN A NUTSHELL: “Job growth looks like it is still strong so the softening in want ads is somewhat puzzling.”

WHAT IT MEANS: Friday we get the September employment report and unless there is an outsized number of positions added and the unemployment rate falls below 5%, it will not likely cause anyone to think the Fed members would consider raising rates at the next meeting. That said, it could be solid enough to bolster the belief that the FOMC will actually do something, other than creating confusion, at the December meeting. ADP estimated that the private sector added new positions at a solid but not spectacular pace in September. While the manufacturing sector is being buffeted by the fall in energy prices and the rise in the dollar, construction seems to be taking off. There was an oddity that bears watching: The largest firms are the ones hiring. That had not been the case for quite some time. On the other hand, small business job gains were modest. This segment had been critical to sustaining the solid payroll increases we have been seeing. Why this pattern, which is opposite to the norm, occurred in September is anyone’s guess.

While hiring continues unabated, firms seem to be more cautious in advertising their open positions. The Conference Board reported that online help wanted ads fell in September. The level is still really high, so don’t take the decline as indicating the labor market is weakening. But we seem to have hit a lull in the growth of new ads. Firms may be realizing that if they cannot fill the openings they have already posted, there is no reason to advertise lots of new ones. Where are the new jobs? Not surprisingly, in computers, health care and management.

MARKETS AND FED POLICY IMPLICATIONS: The labor market continues to be strong and we are likely to see that on Friday. The consensus is for about 200,000 new positions being added and the unemployment rate staying at 5.1%. That would signal that conditions are solid, even if payrolls gains are not quite as strong as they were last year. Basically, the report would be the equivalent of “more of the same” which for the Fed means they don’t have to make a decision right away. As for investors, they are probably just glad to see the quarter end and hope that the final quarter will be better. Since the expectations are for a non-market moving report on Friday, other factors, such as oil, commodities and international issues should dominate, at least until 8:30 AM on Friday. The one warning I have is that the jobs data tend to have periodic surprises. We haven’t had an outsized move, be it on the upside or the downside, for a while. If I had to guess, a surprise would be on the upside, but I have been too optimistic for several months so I am not putting my estimate where my fears are.

September Consumer Confidence and July Home Prices

KEY DATA: Confidence: +1.7 points; Current Conditions: +5.3 points/ Home Prices: +0.4%; Year-over-Year: +4.7%

IN A NUTSHELL: “Despite the volatility in the markets, households are still confident, which means they should keep spending heavily.”

WHAT IT MEANS: When the University of Michigan’s mid-September reading on consumer sentiment was released, we saw a sharp decline. But that may have only been due to the shock of the wildly fluctuating stock markets. The final reading for the month was u from that initial level and that trend was reinforced as the Conference Board’s Consumer Confidence Index rose in September. People tend to spend money when they are comfortable about their current situation, especially their jobs, and they expect their incomes to grow. That is pretty much what the report indicated. The Present Situation Index jumped and the percentage of people saying they expect their incomes to rise in the next few months also was up solidly. There is some concern about the future, though. Whether that is due to the stock market declines or some issues finding jobs is not clear.

The data on the housing market remain solid. The S&P/Case Shiller national home price index rose moderately in July and over the year, it is up at a pace that is not excessive. That is not to say that there aren’t housing price surges occurring in some parts of the nation. Since July 2014, prices rose by double-digits in San Francisco and Denver and by 6% or more in Dallas, Portland, Las Vegas, Los Angeles Miami and Seattle. The national index is now only about 7% below the peak it reached in February 2007.

MARKETS AND FED POLICY IMPLICATIONS: We tend to watch the train wrecks, not the trains that merrily roll along and that seems to be the case right now when it comes to the economy. While some firms that have been battered by weak commodity prices are cutting back, the rest of the business sector is merrily rolling along, adding jobs, expanding output and making money. However, the losers seem to be setting the tone of the discussion. But you don’t get 3.9% GDP growth one quarter and have that followed up by something in the 2.5% range that is the current consensus for the third quarter if most firms are not doing well. And should we really worry about firms that might have had decent foreign sales but because of currency translation issues, their reported earnings are down? I don’t think that really matters, except for some quarterly numbers. Consumers are holding in there and that is driving domestically-oriented business activity. The economy is in good shape, no matter what is happening in Wall Street and I suspect the Fed members recognize that. Indeed, the Gang that Can’t Communicate Straight seems to getting its act together as another FOMC member, San Francisco Fed President Williams, has come out and indicated he thinks rates should rise this year. The ducks are getting in line, even if there are still some who are off on their own. While the markets expect a rate hike next year, most economists are now in the December camp, and that includes me.